Foreign Currency Loans & Home Finance

The foreign currency loan can save a few thousand euros in costs compared to domestic financing. Interest rates are often cheaper abroad than you get here.

It is now known that there is the possibility of a foreign currency loan, even for consumers who take out a loan with a foreign currency loan from abroad. Taking out a foreign currency loan promises many an advantage – especially when it comes to taking out a foreign currency loan as mortgage lending. This construction finance then comes from a bank from abroad, of course also in another currency. But what needs to be considered with mortgage loans as construction finance? What are the special features of this financing? What are the hoped-for advantages?

 

The great advantage of foreign currency loans as mortgage lending

The great advantage of foreign currency loans as mortgage lending

The advantage that many see as mortgage loan for foreign currency loans is the exchange rate fluctuations with regard to the currency and the advantage of using it. In plain language, this means that borrowers are speculating that a favorable exchange rate means that they will have to repay less than they have taken up. With a foreign currency loan as construction financing, the interest can also be cheaper than with a financing in Germany. If you now take out a foreign currency loan as construction finance, you will mostly only have to repay the interest over the entire term and only then the loan amount actually borrowed at the end – this form of repayment is also known as a maturity loan. This means that in the end the entire loan amount must be repaid in one go.

 

The repayment of the foreign currency loan

The repayment of the foreign currency loan

However, as a borrower, you can only do this if you save precisely each month or if you also use a security or life insurance to repay. With foreign currency loans as home finance, it is absolutely necessary to have a constant look at the exchange rate of the currency and some sense of the further course of the course cannot hurt either. The currency advantage of a foreign currency loan as building finance only arises if the euro is stronger than the currency in which the building finance was started. This gives the borrower an advantage in repayment, since the loan installment to be paid is only changed to the foreign currency before it is repaid.

 

The building rate as an advantage: example Japan

The building rate as an advantage: example Japan

There is another advantage to foreign currency loans as building finance, namely that of low building rates. It is often the case that interest rates at a bank abroad are a lot cheaper than at home. With a foreign currency loan you usually think only within Europe and Switzerland or maybe Norway comes to mind. But you look a bit towards the east, namely Japan. Japanese mortgage loans as construction finance can be extremely profitable, as the past few years have shown more than clearly. The central bank is flooding the country with cheap money, hoping to boost the economy. Borrowers in Germany can also benefit from this and often even get an interest rate of an incredible 1.8%.

With a foreign currency loan, however, it is important to be well informed and to have a little idea of ​​the financial market. Farsightedness is definitely necessary if you want to take out a foreign currency loan as construction finance. Let us advise you without obligation – we will be happy to help you on your way to a foreign currency loan.

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