Foreign currency mortgages are generally used by UK citizens looking to buy property abroad. This can be a complicated process and one that it would probably be unwise to attempt without the knowledge and skill of a company that specialises in property purchase in the country of your choice. Banks in the UK, although many certainly have offices abroad, may not be able to offer these specialised skills. Some of the stumbling blocks may include language barriers, local bureaucracy and legal processes. It's not to say that banks in the UK won't give you're a mortgage for property abroad - far from it. Purchasing property abroad is extremely popular but you may need the help of a specialist who can mediate and advise you when you approach you lender. British lenders will lend less for foreign purchases than they would for property in the UK, typically only up to 80% and you may find that the loan terms may be shorter.
Specialist mortgage brokers can organise home loans through lenders in the country where you wish to buy your property. They will be able to source the most competitive rates due to their knowledge of the local financial market. You should bear in mind that in some cases there may be a minimum loan amount requirement i.e. you may have to borrow a minimum of the foreign currency equivalent of £50,000. Don't forget that you will also be liable for local fees and taxes and that the broker will also charge for their service.
You can also take out a foreign currency mortgage in order to buy your home in the UK. You can organise a mortgage, with a bank that offers such services, in US Dollars, Euros and Japanese Yen. The loan amount is then converted into Sterling and you purchase your property as usual. Your mortgage balance and the interest charged remain in the foreign currency at the rate of interest in the particular country. You pay your monthly mortgage repayments in Sterling. The main advantages of foreign currency mortgages include the ability to borrow money at lower rates of interest than in the UK by choosing the currency of a country that has lower lending rates of interest than we have in the UK and the fact that certain countries make available mortgages with much longer fixed rate terms (up to fifteen to twenty years).
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