mortgages in uk

If the loan is only small - why not pay it off?

A loan in a foreign currency can put the capital sum at risk - which can far outweigh any interest gains.

Hi ok its not that small its about 60k on house value of over 200k - I just wondered if it was possible to take a euroland mortgage (rep.of ireland for example) where I can get a 5 year fixed for under 4% which would mean I could knock 5 years off the term of mortgage thanks for advice Roy

Bitstring , from the wonderful person Roy MacDonald said

If you were to do that (and yes, afaik it can be done) you'd discover it's a lot of hassle, you'll have some non-negligable setting up expenses, and the loan will be denominated in Euros. If the pound collapses over the next 5 years (or the Euro soars) you might have to pay back rather more than the 60k pounds you borrowed (although yes, the interest might be lower). Not a problem if you are a Eurocrat and your salary is in Euros. Bit risky if you are paid in £, $$, or Rs.

And if the to forex rate went against you by (say) 30% over those 5 years, your 60K mortgage becomes a 78K one?

"Roy MacDonald" wrote

How do you know what currency exchange rates will do over the term of the mortgage (Sterling - Euro) ??

ointment. I knew there had to be a reason why all u switched on dudes werent doing this. So now I want to find a 3-5 year fixed. what happens if we enter the eurozone before then? thanks again....any pointers to a good fixed gratefully received - present mortgage is with C&G and paying 5.25% for a couple of months then variable (6.25%)

In message , Tim writes

you dont.

Well, a mortgage in USD could be quite interesting!

rob

and if it went in your favour, then it could become a £40k one!

ultimately the different interest rates in different currencies should reflect the way the market expects the currency to go. I didn't take out an interest bearing account in Turkey at 25 %pa becasue the lira was likely to, and did, depreciate massively.

Phil

All I'm saying is that it could go both ways.

Interestingly, hotels and other service-providers in Turkey specify and charge in US$. I guess they would be continually re-printing their rate cards if they didn't!

Rob

Although you are correct in that the forex rate could go both ways, a lot (all?) of these non sterling loans have automatic conversion clauses (when the has depreciated, say, 20% against the chosen currency). This would crystallise a loss. Also, there may be margin call(s) to make if loan is at or near the lender's max LTV.

Conceded -- both important points to consider if getting into an equation like this.

Rob