Mortgage fron foreign lenders

bigmig

Hi all,
My dad was talking to a friend of his about getting your mortgage from an overseas lender with lower interest rates.
The place he mentioned was Japan, which offers low interest rates at the moment.
Does anyone know anything about this practice?

I'm assuming as we don't read about it in the papers it's not allowed or impossible to arrange.
Thanks
Mig

beingjdc

It is allowed, and it is possible to arrange. However the places that will arrange it will only do it for high rollers with a hefty deposit, becuase it's so risky.

For instance, if you'd taken out a £250,000 mortgage from Japan in November, that would have been 60 million yen. However as of today, a debt of 60 million yen would translate as £287,000.

So to save yourself a bit of interest, you'd have paid 15% in two months.

That said, I plan to do it one day.

Jonbvn

Generally speaking foreign currency mortgages are seen is very high risk, due to the extreme volatility of the currency markets.

I have heard of one outfit offering mortgages in a basket of different currencies, which they adjust as interest rates and FX rates change. However, to make it worthwhile, these deals are for 500k+.

dunstonh

I read about many losing out a lot last year because of what happened to the exchange rate in Japan.

Also remember that foreign mortgages are not regulated by the FSA. So not only is it higher risk from a transaction point of view, you also have no consumer protection at all.