Swiss Franc Mortgages for Property in Europe

The vast majority of property purchasers still get their mortgage from a mainstream lender, but there are alternatives. With the world becoming a smaller place, foreign-currency mortgages are becoming the loan of choice for astute home owners and landlords. Of the foreign currency mortgage options open to expatriates, the Swiss Franc based product has become the home loan of choice. 

Whilst British and European interest rates are still quite low, especially in comparison with the 80’s, interest rates in Switzerland are a lot lower. Many of the banks in the British offshore markets offer Swiss Franc mortgages to those purchasing in the UK or Ireland at interest rates under 4%.

Many homeowners do not realise they have the option of borrowing the money they need for their house purchase in a foreign currency, securing the debt on your house and taking advantage of the lower interest rates. Others fear the proposition/ So let’s take a look at the advantages and disadvantages of a foreign risk mortgage:

The biggest concern has to be currency fluctuations. In the case of a UK property, if Sterling strengthens against the Swiss Franc, then the borrowers risk has paid off; they would have to convert less Sterling into Swiss Francs to repay the loan than the Sterling value of the capital they borrowed in the first place. An interest rate saving and pay back less than you borrowed, that's the ideal scenario.

However, if Sterling falls against the Swiss Franc they get the worst-case scenario, and they will end up repaying more money than they borrowed. So in this context, taking out an overseas mortgage rests on the hope that Sterling will not fall against the Swiss Franc. Essentially, they will have converted their mortgage into a currency speculation, securing your most expensive possession, your home, against it! There's big savings to be made - but there's a gamble.

This is the second reason Swiss Franc mortgages have become the most popular in the foreign currency mortgage arena – historically the value of the Swiss Franc has been very stable against other major currencies.

Whatever the borrower decides, it must be pointed out that whilst there are huge savings to make, there is always a risk with a foreign currency mortgage. As such, borrowers should be aware of the potential downside before taking out such a loan – it will not be the option for all, but the perfect option for some.

If you are considering purchasing or re-mortgaging a property, Candour Consultancy works closely with all the banks who lend to expatriates and we can offer home loans in Sterling, Euros, Swiss Francs and other currencies. We can also arrange mortgages in most European, Eastern European, North American, Caribbean and Antipodean countries. 

To speak to one of our fully qualified consultants, click the ‘contact us’ button below and provide us with your preferred contact details and some basic information. Alternatively, click here to download our mortgage questionnaire. Once completed, just fax this back to us and we will email you an obligation free report.