When you are planning to buy overseas property, either as an investment or for a personal use, the most important consideration is what currency to borrow. The simplest way to minimise exposure to exchange-rate risk is to finance the purchase with a mortgage in the local currency. This is because the value of the asset and the liability in your own domestic currency will increase or decrease at the same rate as a result of changes in the exchange rate.
Exchange rates around the world fluctuate 24 hours a day. This means that if your domestic currency is to strengthen against the currency in which the mortgage is denominated, then it would cost you less in your domestic currency to fully repay the mortgage. Therefore, in effect, you would make a capital saving. Conversely, if the exchange rate of your domestic currency is to weaken against the currency in which the mortgage is denominated, then it would cost you more in your domestic currency to repay the mortgage. Therefore, you would make a capital loss.
Why using CurrencyChange for overseas mortgages?
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