With foreign currency mortgages the risks are high but they have the potential to save you a lot of money. This article investigates.

Foreign Currency Mortgages - take advantage of some of the worlds lowest interest rates but the risks are sky high. Page 2

Author: Michael Challiner

So in many ways, a foreign currency mortgage becomes a bet

Another point you should be aware of is the minimum deposit you'd need for a foreign currency mortgage. Most lenders ask for at least 20%. That's a reflection of the increased risk.

Incidentally, you now have second option to consider. You can take a mortgage in £ sterling and have your interest rate linked to a foreign currency interest rate. Whilst you avoid the biggest risk - the exchange rate risk, you are still taking gamble that the foreign currency interest rate plus the interest rate premium you pay, will remain lower than the equivalent UK interest rate. These foreign interest rate mortgages typically have a 5 year tie in clause. So, if you want to repay the mortgage early, you'll have a hefty redemption penalty to meet - although the mortgage can usually be moved to another property. For some borrowers this represents an acceptable risk, especially if the mortgage is linked to the Swiss Franc or Yen where interest rates have been astonishingly low and stable over past years. For example, the Swiss interest rate has not moved above 1% in the last 4 years and in the Eurozone, the interest rate has not changed for 5 years.

Nevertheless, part of the standard wording for a regulated investment warning is appropriate here ... past performance should not be construed as a guarantee of future performance ..

Still too risky for most borrowers!

Did you Know?
The European Health Insurance Card (available through UK Post Offices) allows UK citizens to receive medical treatment in other EEC member state for free or at a reduced cost, if medical treatment becomes necessary during their visit or if they have a pre-existing condition which necessitates medical care (such as kidney dialysis).

The scheme's intention is to enable people to continue their stay in an EEC country without having to return home for medical care. As such, it does not apply to people who have visited a country for the purpose of obtaining medical care. Nor does it cover medical care that can be delayed until the visitor returns to the UK.

Furthermore, the European Health Insurance Card only covers healthcare which is normally covered by a statutory health care system in the country visited, so conventional travel insurance is still necessary.

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Did you know?
A survey conducted by Experian, the largest UK credit reference agency, found that 54% of applicants for personal loans were refused. Of those accepted for a loan, 43% were offered a higher rate than the rate they saw advertised. That's why, if you're searching for a personal loan, it's a good idea to apply through a loan broker who will know the lenders who'll best suit your circumstances.

Did you know?
A survey conducted by Experian the credit reference agency, found that 54% of loan applicants for were refused whilst 43% were offered a loan but at a higher rate than that advertised. That's why, if you're searching for cheap loans , it's usually best to go through a loan broker who will know the lenders who will suit your circumstances.

Did you Know?
According to the Council of Mortgage Lenders, last year over 200,000 homes in the London area were financed by an interest only mortgage without a repayment vehicle being in place. Of these, 60,900 buyers were first-timers.