Move Mortgage To Foreign Currency - Possible?

Scholesy1981

Just wondering, in the event of Ireland going back to the Punt and being left servicing a Euro mortgage using worthless punts would it be possible / feasible to switch a mortgage to another currency, albeit foreign bank before that happens? :cool:

Dirk Gently

so you want to pay a swiss franc mortgage in punt nua?

Scholesy1981

Thats worse again! What im wondering is, what currency, if any, could a punt nua service a mortgage on? seen as the harbingers of doom have us believe that paying the Euro with punt nua is a non runner!

ei.sdraob

If you are earning money in a currency such as dollar or pound then it might make some sense to pay in these, but otherwise why pay in a currency different to your earnings?
Some people in eastern europe have mortgages in Swiss Franks or Euro and it has been a disaster for them.

Godge

You are assuming the your mortgage would remain denominated in Euros.

However, the anecdotal evidence (read Jill Kerby's column on a Sunday for example) suggests that many people with savings are moving the savings abroad. That would suggest that Euro savings would be converted into Punt Nua. The banks could not have it both ways. If savings were converted into Punt Nua, then mortgages would be converted as well.

The question for me is whether all banks would be the same. For sure, AIB, Bank of Ireland, Permanent TSB, EBS would have savings and mortgages converted into Punt Nua but would the same apply to banks such as Ulster Bank and National Irish Bank which are foreign-owned?

ei.sdraob

Godge wrote: »

However, the anecdotal evidence suggests that many people with savings are moving the savings abroad.

Anecdotal?

Dirk Gently

So many variables tbh. assuming punt nua is worthless you really want to have savings or be earning wages in a better currency rather than have your mortgage in another currency but there are so many variables. Are you talking about us defaulting, in which case a 200k euro mortgage is now a 200k punt mortgage? If so, happy days if you have savings in another currency. Not so good if you owe 200k euro and are earning in punt nua. Then again, what if we peg to sterling? fun and games

FreudianSlippers

There will never be punt nua. We wouldn't even have enough money to print a punt nua and it would be worth less than nothing. Can we stop this nonsense now?

ednwireland

just google hungary and euro or swiss franc mortgages if you want to know how good an idea having a mortgage in one currency and earning another is

(ordinary people cant really hedge agianst currency fluctuations)

http://www.thetrader.se/2011/06/30/swiss-franc-and-the-possibility-of-huge-mortgage-defaults-in-central-europe/

http://www.morningstar.co.uk/uk/markets/newsfeeditem.aspx?id=138501958079167

nesf

You really don't want your mortgage in a foreign currency if even the hint of punt nua happening is a possibility. Your savings in a foreign currency might be a reasonable step but you want to keep your debt in Irish banks if at all possible.

Boskowski

How does this 'New Pound' thing keep poping up?

Is it not totally obvious to everyone that we will be going back to horsecarts, peat and turnips if we do that? Your mortgage will be the least of your worries then ...

Seriously

supermonkey

Germany will leave the Euro long before Ireland does.

keithclancy

Always make sure your Mortgage is in the same currency as what you get paid in.

http://www.thisismoney.co.uk/money/news/article-1681157/Special-Report-The-rage-of-Middle-Iceland.html

'We can't pay our yen mortgage'

Olaf Gardarsson, 44, and his wife, Agusta Agustsdottir, 47, bought their Reykjavik family home in January 2007.

They had a 40% deposit and borrowed 23m Icelandic kronur (£115,000 at current exchange rates) with an interest rate of just over 3%.

Their monthly payments, covering both interest and capital repayment started at 120,000 kronur (£600). The credit crunch sent those payments soaring.

'In September last year, I was already in correspondence with the bank about the payments. They said we could just pay the interest. So we took up that offer,' said Olaf.

After the banks collapsed in October, things went from bad to worse, as interest rates jumped. But what ruined the couple was the unique and bizarre logic of the Icelandic mortgage system.

In Iceland, the capital on all home loans is index-linked, usually to the national inflation rate. This means that the size of the capital borrowed rises in line with inflation.

In theory, this means that the lender shares in the rising value of property, which should mean that it can afford to charge a lower interest rate. But when the inflation rate soars and wages stagnate, it spells disaster.

Olaf and Agusta wanted to avoid this and, like many Icelanders, they were sold an alternative mortgage linked to a foreign currency - in their case the Japanese yen.

Such loans were popular in the boom years, as Iceland's currency seemed solid. But now the krona has halved in value against the yen, leaving the couple with huge payments and a mortgage debt of more than twice the amount they borrowed.

They now owe 58m kronur (£290,000). They have stopped paying their mortgage, though they are setting aside as much as they can afford in the hope of an eventual settlement. But their official payments are now 440,000 kronur (£2,200) a month. Their 40% equity has been wiped out.

The couple's lawyer, Bjorn Thorri Victorsson, is convinced that the yen-linked mortgage is not legal in Iceland and plans to contest the way the couple were sold it.

Scholesy1981

Right then, my mortgage is in Euro, my wages are in Euro, and my savings of 3 tins of beans, 2 buttons and the price of small goat are all in Euro, amen to that.

El Soarab

Move your savings to another currency or start saving in another currency because the general consensus is that if we have our own currency again it will be worthless. So you'll be able to just clear your mortgage when that happens.

I'd love the idea of having a punt nua though we should have done that about 5 years ago, would have saved us a lot of trouble with bail outs, etc

The Corinthian

Moving a mortgage to a foreign currency is unwise, especially in the present market. Keeping it in Euro is much safer, but what is important is in what Eurozone country your mortgage is from. I posted in another thread on this earlier.

What you want is a domestic mortgage, so that if Ireland did leave the Euro, so would your debt and you'd not be affected by devaluations in real terms.

TBH, I would go through your mortgage contract with a fine tooth-comb to see if this is covered.