Non Standard Mortgages - Foreign Currency
Foreign Currency Mortgages
Foreign currency mortgages can be used for one of two purposes.
While most property buyers are likely to be aware of the
first use - buying property abroad - fewer people probably
know that it is actually possible to get a mortgage for
your home in the UK denominated in a foreign currency.
Instead of lending you a mortgage in pounds Sterling, a
bank advances you the money in an alternative mainstream
currency, such as US dollars, Japanese Yen, or Euros. The
value of this debt is then converted to pounds Sterling
on the foreign exchange (usually through the same financial
institution that lent you the money) and you then use the
British currency to buy your new property.
Your mortgage debt remains in the foreign currency and
interest is also charged in that currency, usually in the
prevailing rate of interest for that country or zone, as
opposed to the one denominated by the Bank of England. Although
the debt is also paid off in the foreign currency, this
is done by making appropriate monthly payment in Pounds
Sterling and selling this money on the foreign exchange.
