Repsol YPF

Crisis, low salaries, rising prices… With realities such as these few people are jumping into the deep end of the housing market. Getting into debt for twenty-five years is not something everyone wants to go through with the current state of affairs. But for those who are decided on buying a house, there is an uncommon option, but one which can bring joy to the pockets of the brave buyer. It consists of a mortgage in a foreign currency.

The multicurrency mortgage is a very special and complex type of mortgage, given that it is taken out in a foreign currency. This gives us access to the low interest rates currently in effect at the moment in the markets of the respective countries, as well the weakness of the exchange rate of the currency in question.

Its main peculiarity is that it is linked to the performance of foreign currencies such as the yen, the Swiss franc, the pound Sterling, the American dollar, etc. Furthermore, its linked index is not the EURIBOR but the LIBOR (London Interbank Offered Rate). This is the reference index used for large interbank transactions on the international market and which fluctuates according to the state of the same, also depending on the length of the loan and the chosen currency.

In practice, the multicurrency loan is taken out on stable currencies with low interest rates. Furthermore, it is advisable to take out a part linked to the same currency used in your country. In this way the risks are shared between the currencies, in case one undergoes an unfavourable movement.

Advantages and disadvantages

One of the main advantages of this exotic option is that the buyer can benefit from a lower interest rate. In addition, they are given the option of changing from one currency to another whenever they wish, in order to establish the debt in that currency, whether for the interest rate, or for value, or because it is more convenient for the client. The possibility of taking it back the refuge of the euro is always open. By availing oneself of both advantages it is possible to save up to 30% on our monthly mortgage payments.

On the other hand, these mortgages run the risk of changes occurring in the market trend which can revalue the currency, with which more euros will have to be paid for the same amount. There is also the risk that the interest rates of this economy begin to rise, as has occurred in the Eurozone.

Good advice

To avoid unpleasant surprises, the experts advise consumers to link their loans to a number of currencies, so dividing the risk between all of them. Furthermore, it is advisable to take out mortgages over periods of greater than fifteen years to reduce the uncertainty. It is also worth taking advice from a mortgage advisor, because it is a good option for people with knowledge of the money markets and who have good advice on hand.

It would also be a good idea, before signing a contract with the chosen bank, to compare the commissions for changing one currency for another in the branches, because with some banks it is more expensive and with such large quantities we could be talking about a lot of money.

To avoid surprises there is nothing better than a wide range of comparative information and to be led by the hands of knowledgeable experts, who will indicate the criteria to follow when trying to make the purchase of a house more economical, something which many people still dream of.

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