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Don't Take Out A Mortgage In A Foreign Currency
Pimperne1
Posts: 2,177 Forumite
As if it needs saying:
http://www.ft.com/cms/s/2/e7e974c0-cfc9-11e0-a1de-00144feabdc0.html#axzz1WFix1MGs
http://www.ft.com/cms/s/2/e7e974c0-cfc9-11e0-a1de-00144feabdc0.html#axzz1WFix1MGs
"According to Moneycorp, if a borrower converted a sterling (GBP) mortgage worth £500,000 in August 2007 to Swiss francs (CHF), the exchange rate was 2.4022 GBP/CHF, meaning the cost in Swiss francs would be CHF 1,201,100. This week, the loan would have increased to £917,991 (not including repayments) due to the Swiss franc rising to 1.3084 GBP/CHF.
“The only reason to take out a foreign currency loan would be that you want to speculate on the foreign currency depreciating against sterling – which would see the value of your debt decrease,” explained Ray Boulger of broker John Charcol. “It should not be recommended as a product because it will save 2 or 3 per cent in interest rate costs. That could prove a very expensive mistake.”
However, lower interest rates were often cited by bank salespeople as the sole reason for borrowers to take out these loans. In 2006, Swiss mortgage rates were around 2 per cent while UK mortgage rates were almost 6 per cent".
“The only reason to take out a foreign currency loan would be that you want to speculate on the foreign currency depreciating against sterling – which would see the value of your debt decrease,” explained Ray Boulger of broker John Charcol. “It should not be recommended as a product because it will save 2 or 3 per cent in interest rate costs. That could prove a very expensive mistake.”
However, lower interest rates were often cited by bank salespeople as the sole reason for borrowers to take out these loans. In 2006, Swiss mortgage rates were around 2 per cent while UK mortgage rates were almost 6 per cent".
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Comments
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Don't Take Out A Mortgage In A Foreign Currency
er... OK then.... I won't. It's a good job I wasn't considering it, along with 99.99% of the rest of the UK population.0 -
Loughton_Monkey wrote: »[/B]
er... OK then.... I won't. It's a good job I wasn't considering it, along with 99.99% of the rest of the UK population.
Good. If I've helped one person...0 -
Dont buy red wine if you really want whiteNot Again0
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I remeber speaking to a bloke a few years back, he was trying to get a euro mortgage on a BTL for lower rates.
No idea if he got it or not, but if he did, I'd guess he's not feeling too clever now.0 -
1984ReturnsForReal wrote: »Dont buy red wine if you really want white
A true wine buff, if I am not mistaken. In the words of Basil Fawlty, you are probably someone who can tell the difference between a Claret and a Bordeaux. Well done! Similarly, I can spot a Beaune from a Burgundy any day.
It's distinguishing a £Sterling mortgage from a € one that beats me. I'm always getting them mixed up....0 -
heathcote123 wrote: »I remeber speaking to a bloke a few years back, he was trying to get a euro mortgage on a BTL for lower rates....
Sure he wasn't simply trying to get some French mustard on his BLT?0 -
Really useful advice for the Hungarian version of MSE, if 5 years out of date.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0
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are they kidding? not only is it completely pointless to even suggest, they choose the one currency that has appreciated in value considerably.
Next they will be telling people not to take out a mortgage in gold.Faith, hope, charity, these three; but the greatest of these is charity.0 -
A mortgage in gold sounds like a good idea, unless gold isn't going to crash any time in the next 20 years.Next they will be telling people not to take out a mortgage in gold.
First rule of speculation - do it with somebody else's money. Who are the losers in these bad-idea mortgages? Mostly the lenders I would think."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
Interesting thought. Suppose a bank were to offer an RPI-linked mortgage - rock-bottom interest, but the principal increases with RPI so you have to pay the loan off in real money.
Any takers? Why not?
A foreign currency mortgage is a similar kind of thing."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0
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