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International Mortgages?? Can i buy in the UK with mortgage in Dirahms?

International Mortgages?? Can i buy in the UK with mortgage in Dirahms?

Old Oct 25th 2008, 3:52 pm
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Default International Mortgages?? Can i buy in the UK with mortgage in Dirahms?

Hello all

Quick question.... it occured to me that it might be possible to benefit from the exchange rates and buy a property in the UK with an international mortgage where the debt is in Dirhams. This would have a few benfits to me:

1 - If the exchange rates go back to say £/6.5 AED then the loan will be for less punds when in a year or two i go back home and switch it back to a tradional mortgage

2 - Our dream house in the UK is affordable bacause of my Dubai salary and the prices going down back home

3 - It gets rid of the problem of being eligable for a mortgage when i go back to the UK with no UK payslips etc etc

I'm going to investigate further but thought it worth ask here first as it must be something alot of people have done or are thinking of doing!?

I guess the banks risk for currency fluctuations must need to be mitigated some how??
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Old Oct 25th 2008, 5:31 pm
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Default Re: International Mortgages?? Can i buy in the UK with mortgage in Dirahms?

Assuming that the bank will grant a foreign currency mortgage, it would be negligent of it not to insist that you buy the currency forward; e.g. you would contract today to buy the currency at an agreed exchange rate. On the day that the payment was due the bank would charge you at the contracted rate, notwithstanding the rate prevailing at the time of your payment.
Be careful that the bank does not try a double whammy whereby you contract to pay the contract rate OR the day’s rate whichever is the highest (i.e. least beneficial to you).
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Old Oct 25th 2008, 7:33 pm
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Default Re: International Mortgages?? Can i buy in the UK with mortgage in Dirahms?

Originally Posted by lofty1 View Post
Hello all

Quick question.... it occured to me that it might be possible to benefit from the exchange rates and buy a property in the UK with an international mortgage where the debt is in Dirhams. This would have a few benfits to me:

1 - If the exchange rates go back to say £/6.5 AED then the loan will be for less punds when in a year or two i go back home and switch it back to a tradional mortgage

2 - Our dream house in the UK is affordable bacause of my Dubai salary and the prices going down back home

3 - It gets rid of the problem of being eligable for a mortgage when i go back to the UK with no UK payslips etc etc

I'm going to investigate further but thought it worth ask here first as it must be something alot of people have done or are thinking of doing!?

I guess the banks risk for currency fluctuations must need to be mitigated some how??
Normally, the lender will take a charge over the property, and retain the deeds etc.

But if you default on the repayments, what redress would a UAE-based lender have? Could they repossess your UK property through the UAE courts? Or even the UK courts?

On the exchange rate question, surely it's better to have a GBP-based mortgage (even if you obtain it from a UAE-based lender), after which you want the GBP to weaken even further? Your AED-based income would presumably be used to buy GBP each month to repay the debt, so it will cost you less of your AED income to meet the GBP repayments.

The bank will not wish to expose itself to currency exposure on a loan to you, but it may allow you to do so.

But be warned - after the recent credit/liquidity fiasco, mortgages in ANY currency are harder to find - and/or are VERY expensive........
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Old Oct 26th 2008, 9:10 am
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Default Re: International Mortgages?? Can i buy in the UK with mortgage in Dirahms?

Originally Posted by lofty1 View Post
Hello all

Quick question.... it occured to me that it might be possible to benefit from the exchange rates and buy a property in the UK with an international mortgage where the debt is in Dirhams. This would have a few benfits to me:

1 - If the exchange rates go back to say £/6.5 AED then the loan will be for less punds when in a year or two i go back home and switch it back to a tradional mortgage

2 - Our dream house in the UK is affordable bacause of my Dubai salary and the prices going down back home

3 - It gets rid of the problem of being eligable for a mortgage when i go back to the UK with no UK payslips etc etc

I'm going to investigate further but thought it worth ask here first as it must be something alot of people have done or are thinking of doing!?

I guess the banks risk for currency fluctuations must need to be mitigated some how??
My 2p worth.

Why would you want to buy in the UK now? Prices are falling at 1-2% per month and that was before the country was in recession. Price crashes like this typically last for 3-4 years and the UK has been falling for a year. The fact you are in Dubai tells me you don't want the place to live in. Do you seriously think you won't get more for your money in 1-2 years?

These bubbles have been building for years. To pile in right at the point they pop is absurd - the big bargains will come a bit later. Think about 2 years of recession and what that will do to prices.

I assume your pay packet is in GBP? Otherwise your dirhams are just going to convert into fewer GBP if the AED weakened as you hope.

Personally it seems to me that deleveraging around the world is going to lead to a period of global deflation. The best you can do for investment is to hold cash in a spread of major currencies (to balance risk) and some gold.
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Old Oct 26th 2008, 12:54 pm
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Default Re: International Mortgages?? Can i buy in the UK with mortgage in Dirahms?

In short, no. You cannot get a Dirham mortgage secured on a UK property.

One option however, assuming you fit the strict criteria, is to take an international mortgage with currency options and borrow in USD. Whilst the Dirhams is pegged to the USD, it is much the same thing.

And lenders do not allow you to buy forward on a currency mortgage. That is too costly and complicated to make it worth their while.

PM me if you want info regarding options.


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