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Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

Old Jan 5th 2008, 2:40 pm
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Default Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

Ok this may be a very stupid question but here it goes.

Looking at the Australian interest rates which are very high indeed, I cant see why you wouldn't be able to get your local mortgage provider (in your home country, ours being Ireland) to mortgage the property for you thus paying lower interest rates. Ireland has seen a huge boom in people buying oversees for the past number of years and have been mortgaging properties outside of the country for awhile now. So my question is can this be done???
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Old Jan 5th 2008, 3:45 pm
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Default Re: Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

barclays do a mortgage for people abroad - but i don't know if its just in europe? I can't get a mortgage here lol so god help me in Aus!
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Old Jan 5th 2008, 6:31 pm
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Default Re: Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

A good few Irish banks do mortgages abroad but just wondering what the tax implications are in Australia.
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Old Jan 5th 2008, 7:10 pm
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Default Re: Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

Originally Posted by Mairead View Post
Ok this may be a very stupid question but here it goes.

Looking at the Australian interest rates which are very high indeed, I cant see why you wouldn't be able to get your local mortgage provider (in your home country, ours being Ireland) to mortgage the property for you thus paying lower interest rates. Ireland has seen a huge boom in people buying oversees for the past number of years and have been mortgaging properties outside of the country for awhile now. So my question is can this be done???
If your income is in Australian dollars then it is really "not smart" to have a mortgage denominated in a foreign currency as you can get badly mauled by exchange rate changes.

There are stories out there of Australian farmers who lost a lot of money taking out Japanese yen and Swiss franc mortgages in the 1980s because the interest rate was "lower".

There is the more practical objection that a lender in Britain or Ireland will most likely not accept Australian property as security.
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Old Jan 5th 2008, 7:18 pm
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Default Re: Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

The FX issue is a risky one but one you can overcome by knowledge of the markets (Worked at a currency exchange for most of my career) however the question is as you say whether or not a bank will take the risk on an Australian security. Might mention it to the mortgage broker at our bank.
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Old Jan 5th 2008, 9:17 pm
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Default Re: Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

Originally Posted by Mairead View Post
Ok this may be a very stupid question but here it goes.

Looking at the Australian interest rates which are very high indeed, I cant see why you wouldn't be able to get your local mortgage provider (in your home country, ours being Ireland) to mortgage the property for you thus paying lower interest rates. Ireland has seen a huge boom in people buying oversees for the past number of years and have been mortgaging properties outside of the country for awhile now. So my question is can this be done???
Yes of course it has been done. Its the risk of exchange differences that holds people back.

A short term movement in rates can cripple you - ie make you unable to make repayments - unless of course you have sufficient income streams in both countries to make the payments. This would then be hedging ie borrow in Ireland, make repayments in Ireland. Take the funds to say Australia (ensuring to maximise the rate).
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Old Jan 5th 2008, 9:31 pm
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Default Re: Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

Originally Posted by Coppock View Post
barclays do a mortgage for people abroad - but i don't know if its just in europe? I can't get a mortgage here lol so god help me in Aus!
Hiya,

Just wanted to say hi really, I noticed your only in Northwich ! I live in Crewe.

It's a small world !!

Sorry for interrupting the post

Donna.
x
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Old Jan 11th 2008, 10:27 am
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Default Re: Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

It certainly aint a stupid question!!

i have even searched the net for Banks who would do this but never acted on it.

If anyone out there has done it please pass on the info


Originally Posted by Mairead View Post
Ok this may be a very stupid question but here it goes.

Looking at the Australian interest rates which are very high indeed, I cant see why you wouldn't be able to get your local mortgage provider (in your home country, ours being Ireland) to mortgage the property for you thus paying lower interest rates. Ireland has seen a huge boom in people buying oversees for the past number of years and have been mortgaging properties outside of the country for awhile now. So my question is can this be done???
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Old Jan 11th 2008, 10:38 am
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Default Re: Mortages Aus/Uk/Ireland - Mortage interest rates - Possible loop hole???

Well it can be done and in fact why would you both with UK/Irish interest rates - what you really want is Japanese interest rates at 1-2%. Come to think of it - why wouldn't you borrow in Japan (at 1-2%) and deposit in Iceland or the Ukraine where interest rates are 17-18%?

Well there are two reasons.

1. Unless you are very wealthy (and the bank sees a long term positive return) they would not take the risk of lending on a property in another country. What happens if you default? They would have no chance of them recovering their money.

2. More importantly for you an an individual, exchange rates tend to move! I have just left a Euro denominated country where five years ago the exchange rate relative to the USD was 0.90, today it is 1:48. Given the lifespan of mortgages I'm not sure thats a risk I would like to take on.
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