Exchange rate
Vs Mortgage

If your dream is to buy a property overseas, you will be more than aware of the effect the exchange rate is having on your budget/spending power.

So is there a solution?

Many people look to move abroad with the intention of being debt free buying with cash. Whilst the money markets are in a state of uncertainty, many banks and investment funds are eager to get hold of your cash to strengthen their reserves. To entice you to part with your savings there are a number of excellent savings returns currently available to you. Many of our clients are looking to find an easy solution to the dilemma of moving now rather than waiting for the exchange rate to improve. Some analysts predict this could be 12 months.

A choice of many has been to take advantage of a €uro mortgage here in Spain to fund their purchase. With rates from less than 5%, it is one idea to invest your money at a higher rate in the UK to offset the mortgage interest. The mortgage effectively ’buys’ time until the exchange rates are more favourable.

Kaupthing Edge offer an instant access savings account with an AER of 6.5%, whilst Northern Rock are offering 6.4%, however the ‘take up’ on this may be a little cautious! Look around on sites such as Moneysupermarket.com for ideas.

So in essence, this is the solution chosen by many.

1. Invest the majority of your ‘cash’ in a high interest account.
2. Obtain a €uro mortgage for upto 80% of the property valuation. Consider interest only for lower payments.
3. Buy some time until the exchange rate is in your favour.
4. Maybe consider some of the excellent deals currently available, such as these guaranteed income deals.

This article is offered as a suggestion of possible solutions. It is in your interests, as with all financial matters, to seek the advice of professionals.