Borrowing in a Foreign Currency
Have you ever considered switching the mortgage on your UK home, or BTL property, into another currency? You can select from any number of currencies; Japanese Yen, Swiss Franc, US Dollar, Euro etc. These loans are for domestic residential property, and BTL portfolios only. The concept is to pay just interest only and let fluctuations in foreign currencies against GBP Sterling do the work of reducing your mortgage debt.
Please note that, at certain times, exchange rates may not perform as expected and the value of your mortgage could therefore go up as well as down. Certain restrictions do apply, so for more information on multi-currency lending call us on 0117 223 2050
A maximum borrowing level of between 65% and 70% Loan to value is available and secured by first legal charge on any residential or buy-to-let property.
Professionally managed multi currency mortgage accounts
The following major currency denominations are also available for switching the loan into and out of: Swiss Franc, Japanese Yen, Euro, United States Dollar, Canadian Dollar and Australian Dollar. If you have some experience of the foreign exchange markets or experience with trading platforms such as forex (fxcm) real-time international currency trading, you could also manage your own account switching debt between currencies yourself. Alternatively we can appoint the services of a professional currency manager to do this for you, managing your entire debt over the term for the most efficient debt reduction. This is achieved by selectively switching your balance (or portions of it) between currencies as they weaken against Sterling GBP.
Example of effective debt reduction through multi-currency lending:
A client’s sterling mortgage of £1,000,000 in 1988 was remortgaged to a multi-currency loan. Professionally managed, the balance was reduced to a nil by 2003, without the client making any capital reductions. The account continued to be managed to a position with a credit balance worth £206,884 as of Dec 2006.
Example of how Debt Reduction works :
A Mortgage value of £1million Stirling converted into Yen when the rate of exchange was 180 (Yen to the Pound) – the value of the debt in Yen is ¥180 million. But if the Yen weakened to 200 to the Pound, converting the mortgage back into sterling would cut the loan to £900,000, saving £100,000 of the mortgage through the currency movements.
Tax Efficient Borrowing: Under the current UK tax legislation, reductions in the sterling equivalent of a mortgage would not be liable to Capital Gains Tax where borrowing is secured on the main residence. A reduction on paying less interest on would not be taxed as additional income. We would reccomend that you talk to your tax adviser or accountant on how you may be affected.
Other major currencies:
Japan Yen (JPY) ¥
Swiss Franc (CHF)
US Dollar (USD) $
Canadian Dollar (CAD) $
Australian Dollar (AUD)
Euro (EUR) €
Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured on it. Exchange rate movement may affect the Sterling equivalent of your debt.