mortgages from overseas?

hi all,

Has anyone ever had a mortgage from overseas for an Australian property - that is, get a mortgage from an English bank (at cheaper rates compared to here) for an investment property here?

I realise that currency flunctuations may be an issue though and i recall many people got stuck with this in the 80s and this is a concern.

The reason i ask, is that while our interest rates may be going up in the next few years, many banks, particularly in Asia will be keeping their rates lower. Taking this one step further, a few years back (when our rates were around 8%), I approached some banks in Taiwan asking about mortgages as their rates were around 2% at the time. however they told me that they were not allowed to offer international mortgages and this was a Taiwan government law - not a bank restriction. (I was living in Taiwan at the time though and was looking at buying here).

So does anyone have any international mortgages for properties in Australia? Is it something to consider?



Thanks


g
 
Hi G

Sourced out of Australia u can get a forex mortgage if you earn in that currency.

Japan, HK, Singapore etc is where you can often find even Aussie Banks that will do local denominated mortgages with lower lvrs and margin call clauses. they usually want u to be earning the currency you are borrowing in

ta
rolf
 
We can do a US dollar loan which from memory the rate is circa 3% at present.

Exchange rates etc will be the concern and a good reason why you want a loan in an alternate currency.
 
I can get a loan from ANZ here in Japan to service Australian property, however income levels need to be huge (mainly geared for expat salaries of $200k etc), and Im not at that level so cant get it.

The interest rates are nice, around 2% from memory, but you have exchange risk to factor in.
 
We can do a US dollar loan which from memory the rate is circa 3% at present.

Exchange rates etc will be the concern and a good reason why you want a loan in an alternate currency.

As Rolf has already said I think you will find that unless the borrower earns most of their income in the currency being borrowed the Dragon's non-resident lending unit will not approve.

Also even if you could get your hands on their low foreign currency loan rates the margin call risk is huge for those without more than adequate resources.
 
Jebb,

One of the main problems with borrowing in yen through Japan based Oz banks is they way they set the LVR criteria when you initial borrow. If the currency fluctuations take you above the LVR you may have to put cash in to bring your LVR down. Have had a few dealings with some of these guys and most have no idea about investing in IP's and as you mentioned think you must be on 200K a year etc. If you find someone in the so called inner circle it is amazing how they can also push loans through for residential ppor with minimal checks.
 
Jebb,

One of the main problems with borrowing in yen through Japan based Oz banks is they way they set the LVR criteria when you initial borrow. If the currency fluctuations take you above the LVR you may have to put cash in to bring your LVR down. Have had a few dealings with some of these guys and most have no idea about investing in IP's and as you mentioned think you must be on 200K a year etc. If you find someone in the so called inner circle it is amazing how they can also push loans through for residential ppor with minimal checks.

Interesting. To be honest, I didn't chase it up any further because the income levels required left me ineligible.

I might have to start going to banker's networking meetings etc as Im looking to do a development in a few years time and a 2% loan would be ace!! Assuming I could get past the income checks, I wonder if it would be any good to get a loan for $500k here in Japan to fund a 2-house subdivision/development in Perth, where I have a loan for about $450k on IP2. I also have $200k in the offset against this $450k, and the lender is actually ANZ.
 
Don't underestimate the effects of currency fluctuations. There is a reason why the LVRs on these loans are very low. Whilst affordability may not be a problem, shifts in rates can trigger a margin call very easily.
 
Don't underestimate the effects of currency fluctuations. There is a reason why the LVRs on these loans are very low. Whilst affordability may not be a problem, shifts in rates can trigger a margin call very easily.

true, the AUD went from over 100yen to 58yen in the matter of a couple of weeks back last year. While that would be good in my situation (earning in yen), the opposite can obviously happen.
 
Jebb,

you get caught out both ways. although you get more yen to the AUD the value of your properties has actually gone down if you sold and tried to pay back the yen. They may ask for you to top up the difference in this situation.
 
Just to say that we do currently hold one of these in SGD, and while I've been happy with it to date, yes, the FX ramifications can be severe, and you have to be prepared for them. It's better if you are repaying in the same currency, but you still have to have an exit strategy.

When the dollar dived last year, we had two successive margin calls which totalled 25% of the original loan value within a couple of months. We were allowed to keep this in AUD, so no harm done, but if you don't have the cash ready to go they can and will convert your loan at the worst possible time.
 
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