80k Loan

AntCoe

Hi Everyone.

I am looking for an 80k loan to fund a property in South Africa. The current exchange rate is so favourable and i would like to take advantage of this. I want the loan to be in sterling. I qualify for a mortgage in South Africa but this wont help me as i want the mortgage to be in £. Any help would be appreciated.

Regards

jonesMUFCforever

Are you in UK now or S africa?
Are you UK or S african national?

Are you aware of exchange controls in S africa and its implications?

You will not get a £80k loan unsecured so do you have anything tangible to offer as security?

AntCoe

Hi.

Thanks for your reply.

I am living and working in the UK. I have both British and South African citizenships.

The property that i will purchase will be the asset the loan will be against, so it will be a secured loan.

Not sure if the best way to do this is to first purchase the property against a South African mortgage and then to apply for a UK loan to pay off this mortgage in a lump sum ? The desired effect will be to pay off this loan in sterling, while earning sterling and not opening myself to any exchange rate fluctuations.
Yes i am aware of exchange control regulations.

Thanks

[Deleted User]

No UK lender will secure against an overseas property.

jonesMUFCforever

zx81 beat me to it - no chance at all I'm afraid.

SeanG79

Why would you not want the mortgage in SA and to pay the mortgage from the UK if you qualify for the mortgage in SA? Assuming you want to avoid exchange rate fluctuation, but the Rand will never significantly strengthen against the Pound, there is too much political turmoil and lack of investment in infrastructure to ever allow that to happen. So whilst the Rand may strengthen over the short term, over the longer term it will only weaken.

Assuming while you are living and working in UK, you will rent out the property in South Africa? The rental income should cover majority of the mortgage payments, which further reduces your exposure to exchange rate fluctuations.

The third thing is inflation in SA. Inflation is likely to surpass interest rates based, the property value and thus rental income opportunity increases will outgrow the interest on the mortgage, so looking ahead you should reach a point where there is no need to make payments from UK and the property can "pay for itself"

The risk of financing in the UK is that if the Rand devalues rapidly, the property will be worth significantly less in Pound terms. Property in countries like Zimbabwe tended to remain stable over a longer term when compared to a US$ exchange, but took their time to recover after devaluation. South Africa will be no different.

TheDebtinator

Besides, if a bank had have given you £80k for the property, how would they secure it against it? You dont currently own it, they would be given you the money to buy it in advance, unlike a mortgage. You can you only secure loans against things you own at the time of applying...

Johnnytwostep

why only 80K, I would imagine it would be quite easy to get at least double that from a UK bank, especially as the bank will be safe in the knowledge that their money is secured against a non-existent 'asset'

foxy-stoat

Can image the telephone interview now with the lender:



Goooooood afternoon....

SeanG79

Previously UK lenders did offer loans/mortgages on properties abroad, so don't think its such an unusual question. Although admittedly post recession this is unlikely.

Barclays is the major shareholder of ABSA bank, so may take a view?