Barclays

An introduction to foreign currency mortgages

This guide explains foreign currency mortgages and the main reasons for taking one.

We also have other guides, including general mortgage advice and international mortgages.

Why choose a foreign currency mortgage?

People take out a foreign currency mortgage for two main reasons:

1. To reduce risk by matching the currency in which you are being paid.
2. To benefit from a lower interest rate overseas.

Reduced risk

By matching the currency of the mortgage with that of your income you can cut the cost of money exchange and transfer.

For example, you might have bought a property in the UK with a sterling mortgage while your salary is in euros. If the value of sterling rises against the euro then your monthly mortgage payments will become more expensive in euros even though the interest rate may not have changed.

However, if a foreign currency loan is taken against a UK property, the relative size of the loan compared to the value of the property can be adversely affected by exchange rate movements.

Depending on the value of the property, you might be able to get a currency mortgage with Barclays International to buy property in the UK. Mortgages can be set up in sterling, US dollars, euros, Japanese yen, Hong Kong dollars and Swiss francs.

Get a lower interest rate overseas

The attraction
In 2007 the interest rate in the UK was around 5% while in Japan it was nearer 0.5%. Many UK citizens buying a property in the UK considered exchanging their sterling mortgage into Japanese yen in order to pay a lower rate of interest on the loan.

The risk
The danger is that exchange rates and interest rates can change, meaning that your monthly payments could increase. This is particularly important over the relatively long lifetime of a mortgage.

UK residential currency mortgages

These are for buying or remortgaging a UK residential property in which you, or a member of your family, will live. Clients of Barclays International can match the mortgage to their salaries in sterling, US dollars, yen, euro, Hong Kong dollars or Swiss francs. Terms of five to twenty years are available.

Offshore mortgage

Barclays International is one of the leading providers of offshore mortgages in jurisdictions such as Guernsey, Jersey, Gibraltar and the Isle of Man. We offer fixed rate, variable rate, sterling and currency options for both residential and investment properties.

Mortgage structures

There are a number of mortgage structures available in different currencies, including:

Variable rate mortgages
These include tracker, standard variable rate (SVR), capped and discount mortgages (subject to availability). The interest you pay can change each month, but these mortgages may offer either lower interest rates or greater flexibility.

Find out more about our variable mortgages.

Fixed rate mortgages
These tend to have a two- to five-year introductory period during which the interest rate is fixed. Some Barclays International clients will be able to get a longer fixed rate period.

These tend to have a two- to five-year introductory period during which the interest rate is fixed. Some Barclays International clients will be able to get a longer fixed rate period.

The attraction of a fixed rate mortgage is that it offers a high degree of certainty on the monthly payments and interest charges.

After the fixed rate term is over, the mortgage will normally revert to the SVR and the repayment may be higher.

Find out more about our fixed rate mortgages.

Repayment mortgages
The monthly payments on these mortgages repay the capital borrowed as well as paying the interest.

Interest-only mortgages
An interest-only mortgage has the benefit of lower monthly payments but you have to make separate arrangements to repay the capital.

For more detailed information about the different mortgage structures available see the guides on mortgage advice and getting a mortgage quote.

Mix & Match mortgages
Clients might be able to create a mortgage that meets their needs by bringing together elements of fixed rate and tracker mortgages.

Survey and valuation services

When taking out a mortgage, Barclays International clients can choose from three types of survey and valuation:

• Barclays Valuation. This is a statement of the overall condition of the property, highlighting structural movement and essential repairs.
• Barclays Survey and Valuation. This report covers the main elements of the property, with particular reference to major defects such as movement, dampness and decay.
• Barclays Building Survey. This is a detailed building survey of the structural integrity, visible condition and state of repair.

Included with your report you will find advice on energy efficiency, property maintenance, security and fire safety.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

If your loan is denominated in a currency other than sterling CHANGES IN THE EXCHANGE RATE MAY INCREASE THE STERLING EQUIVALENT OF YOUR DEBT.

For more information or to apply

To apply or find out more information speak to a Barclays International Mortgage Adviser. We specialise in providing a range of residential/investment mortgages for property purchases in the UK, Jersey, Guernsey, Isle of Man and Gibraltar.

Call us on +44 (0)1624 684305†

Alternatively please contact your Barclays International Relationship Manager, if you have one.