[Tinaelsdon]

Does anyone know if you can get a mortgage outside to pay for a house you buy here in NZ. The mortgage rates here are very high the lowest ive seen is 7.87 % where as if we go with a British bank it would be a lot lower. Has anyone tried this or know if there are any restrictions or complications?

Just thinking ahead at the moment.
Scott & Tina

[veronica]

I would be interested to know this too for our daughter. still in UK but planning to get here in a couple of years time.

[Natalieb]

I wonder if thats possible?

Im in the process of changing my UK mortgage to one which I can easily get out of when we move without having penalties. I will ask them if this is something they would consider. Im pretty sure they wouldnt feel confident lending that sort of money to someone at the other side of the world, but you never know, they can only say no ;)

Natalie

[leachio]

Mu friend is also my mortgage advisor with Clydesdale bank, I asked him that very question and he says that banks dont give international mortgages, I asked if we couldnt borrow 70-80 K as we wont have much to take with us from sale of our UK house, but again he said the most they will lend on a loan is 20k. I cant remember the exact reasons why no international mortgage but basically to do with not actually seeing the property, doing surveys etc on it in UK.

Hope that hepls although it's not the answer we are looking for!!

Amanda :)

[Tinaelsdon]

Thanks Amanda thought it may be too good to be true... will have to stick with the high interest rates.

[Anita & Marco]

I guess the reason for being impossible to do this, is just that the overseas bank can't claim the right when you won't pay the mortgage?
In my opinion there are legal reasons for this.

Cheers,
Anita

[Mr TW]

I was so sure I had heard that lloyds tsb covered international mortgages I just had to follow it up. This may prove useful - has anyone used the service?

http://www.lloydstsb-offshore.com/International/Mortgage

[Mr TW]

There is also this on the current rates if it helps someone

http://www.international-mortgage-plans.com/expat_mortgage_rates.htm

[Super_BQ]

NZ's high mortgage rates over the past few years has created a major opportunity for foreign banks in NZ to profit. The majority of banks in NZ are Australian own and have an advantage of borrowing funds at lower rates (from Australia) and lend it at the higher rates in NZ.

We've seen the appearance of other mortgage companies like GE Finance. Although not a bank, they are not regulated to the same extend as the other charter? banks in NZ. They can source their funds from the US or Canada where rates are less than half in NZ and generate a greater profit than say banks like Kiwi Bank which are their lending ability is tied to their borrowing ability from the central bank (usually a ratio between the bank's local savings deposits vs. loans borrowed from the central bank).

The inability of getting loans for foreign assets overseas is quite clear. Laws in one country can not apply to laws in another country.

The sign of high inflation in NZ is a precursor of high interest rates. The problem Dr. Cullen (Fin. Min. of NZ) has is at 1 end he is trying to control inflation by raising interest rates, while at the same time these high interest rates attract more foreign investment (the very same things that he "would like" to restrict coming into NZ). He can't stop wealthy immigrants coming into NZ and buying up real estate.

BQ

[Trigirl]

Mr TW - there's quite an important note towards the end of the Lloyds TSB scheme page

Please note that we are unable to provide finance for property used as a primary residence.international finance mortgages are intended to help UK residents buy a second home overseas, not to help NZ residents buy their primary residence.

[Rabbit]

I was thinking about this the other day.

One idea was to take out a mortgage in Japanese yen at 0.25%

Not sure how feasable that is, and yes there are the risks associated with currency fluctuations.

[Mr TW]

Mr TW - there's quite an important note towards the end of the Lloyds TSB scheme page

international finance mortgages are intended to help UK residents buy a second home overseas, not to help NZ residents buy their primary residence.

Thanks Trigirl. Just thought I would post the info in case it helped. As I wasn't doing it myself I didn't read the small print ;)

[MarkS]

and yes there are the risks associated with currency fluctuations.

Which is of course the crux of the matter. I'd be amazed if you can find a bank that's willing to lend money in one currency secured on an asset priced in another. The difference between the two countries legal systems is another big barrier. They have no guarantee that some years down the line they'd be able to repossess your house if they needed to, and you could be facing some huge fluctuations in your monthly repayments along the line. I'd also expect that the legal fees in arranging all this would cancel out a good few years of your interest cost saving.

Of course, borrowing cheaply in one currency to invest in assets in another is done all the time by the investment banks, it's known as the "carry trade". It's also considered very risky, as was seen last year when a currency crisis in Iceland (like New Zealand, a small country with a modern banking system, and high interest rates) lost a lot of people a lot of money. Google "carry trade Iceland" to see lots of scary headlines!

http://www.google.co.nz/search?q=carry+trade+iceland

So, like I said, I'd be very suprised to find a bank willing to lend you money this way (and very interested to hear how you managed it). And personally speaking, I'd consider this way too risky a game to play with the home I lived in. It might be different for an investment property, providing that the sums did actually make it a realistic business case, but I'd be quite sceptical that they would.

[rockyhopper]

So, like I said, I'd be very suprised to find a bank willing to lend you money this way (and very interested to hear how you managed it). And personally speaking, I'd consider this way too risky a game to play with the home I lived in. It might be different for an investment property, providing that the sums did actually make it a realistic business case, but I'd be quite sceptical that they would.

FYI. Some years back, a number of local banks in Hong Kong offered mortgage denominated in Yen for Hong Kong properties. However, it's never been quite a popular product.