Can I take a Mortgage out with overseas Bank?

bigdawg

Does anyone know if its possible for an Irish citizen domiciled in Ireland and owning an Irish property to take out a mortgage with a foreign (e.g. UK, French , German) institution?

I am looking into this as I presume that the mortgagee would then be subject to different rates, rate increases, etc.

Is this possible? Given that we are all part of the EU I would have assumed it is?

coylemj

In theory it's possible but given the international view of Ireland and the collapse of our property market, I think it's highly unlikely that a foreign bank would lend you money for anything to do with residential or commercial property.

But let's pretend that the good times are still rolling....

If they did give you money then it would depend on where the money was coming from. If you borrowed from a bank in the Euro zone then you would not get better rates because money flows freely among Euro zone countries so all of the financial institutions within the Euro zone would be charging more or less the same interest for the same type of loan.

If you borrowed from a UK bank then at a given point in time you might get a better interest rate but you would be carrying a significant currency risk because your outstanding balance at all times would be denominated in sterling so if the Euro took a dive against sterling then your loan (expressed in Euros) would increase significantly.

When Ireland joined the Euro, this risk was removed for Irish banks so they tapped into the European money markets when money was plentiful and interest rates in the Euro zone were low which means they got access to cheap Euros and the rest, as they say, is history.

bigdawg

Thanks for the reply. You say that all institutions across the EU would more or less be charging the same. You see, I dont think they would. I know that we have traditionally had lower rates than our Euro colleagues but what is happening in Ireland now, and will continue to be the case, is that banks are going to cross finance their loss making tracker mortgages by increasing rates - at will - on variable mortgage holders. The Govt wont step in to stop them either, cos they know the banks have to find the money from somewhere, so its either the people pay or the Govt does.

So I'd rather be in a regime where increases are well flagged and reasonable and not at the behest of the (loss making) bank.

coylemj

You're probably right, I'm sure that mortgages are cheaper in France and Germany because (1) their banks can still access relatively cheap money because they're not bankrupt and (2) the local property market didn't completely collapse in the crash so it's still safe to lend money to people buying property.

Bear in mind that in mainland Europe most people are not born with the home-owning gene unlike the Brits and the Irish so only a relatively small percentage of the population in places like France and Germany aspire to ever owning an apartment, let alone a house with front and back gardens. Thus the local banks won't exactly roll out the red carpet when someone with a relatively ordinary job asks to borrow three times their annual salary to buy a house.

Be my guest, contact a few French and German banks and see their reaction when you ask for a loan to buy property in Ireland.

bigdawg

I will look into it a little further. I gather the technical difficulty could arise in the foreign bank being able to reclaim your property if you did default. I think there is an issue there in terms of their ability to pursue that, and for that reason, they dont give them out.

But its definitely worth a look. The market here is effecitively an oligopoly at this stage. Its like "you can have high or you can have high".

thanks...

rameire

under central bank rules, i would believe the bank you want to get a loan from will have to have a presence within this jurisdiction.