Overseas Borrowing

rsage

Is it possible or even legal to get a mortgage from an overseas lender. For example could I apply to an American bank for a mortgage and take advantage of both their lower exchange rate and the currency.

Japanese interest rates are virtually zero could you borrow the money from them.

JoeK_3

It is possible but it's a specialist sector that not many UK advisers will cover.

JoeK

kingkano

I think part of the problem is they can't take a security over your property unless they have a UK office right? And if they have a UK office they probably would just lend at local rates and keep the difference themselves lol.

JoeK_3

kingkano wrote: »

I think part of the problem is they can't take a security over your property unless they have a UK office right? And if they have a UK office they probably would just lend at local rates and keep the difference themselves lol.

There are International offices of the major players that will now lend on most foreign currencies.

JoeK

kingkano

JoeK wrote: »

There are International offices of the major players that will now lend on most foreign currencies.

JoeK

Interesting. This being the case, with Japanese mortgage rate at about 2.5%, I just cant see how the risk is big enough not to go for it? Yes currency could go against you, but doesnt 4% difference cover you a bit there?

JoeK_3

Good point.

Yes loans denominated in the yen are available.

Can you speak Japanese?

JoeK

jago25_98

Could be a hot tip.
I will ask my friend who is Japanese.

Especially interesting for those such as myself looking to buy abroad.

How does the exchange rate effect anything? It's only if it changes there could be a problem surely?

IveSeenTheLight

jago25_98 wrote: »

Could be a hot tip.
I will ask my friend who is Japanese.

Especially interesting for those such as myself looking to buy abroad.

How does the exchange rate effect anything? It's only if it changes there could be a problem surely?

rsage wrote:

Is it possible or even legal to get a mortgage from an overseas lender. For example could I apply to an American bank for a mortgage and take advantage of both their lower exchange rate and the currency.

Japanese interest rates are virtually zero could you borrow the money from them.

The Japanese exchange rate is not good at the moment.

Much better looking at the Swiss Franc which is much more in line with the GBP.
I believe the interest rate there is approx 3.7%

Jonbvn

Currency markets are extremely volatile at the moment (when are they not?). As an example, there are two articles on the Torygraph website this morning predicting 10%+ falls in sterling against the dollar.

If you are paid in sterling, and servicing a US$ mortgage such changes in exchange rates would more than outweigh any interest rate benefits.

For the reasons outlined above, foreign currency mortgages are generally seen as very high risk.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/05/cnhsbc105.xml&CMP=ILC-mostviewedbox

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/23/cnuksham123.xml

wisbech_lad

Exchange rates regularly change 20% a year, plus or minus. Which tends to wipe out a 4% interest differential! Yes, you can get foreign currency mortgages, they are usually "managed" swapping between currencies before the loss becomes too great. But high risk.