If you had put a £1m mortgage into US dollars at the start of the year and left it without making a single payment, then thanks to the falling dollar that mortgage would have decreased in value by more than £70,000.
Such is the beauty of foreign currency mortgages, and the reason that a growing number of high-net- worth individuals are employing them. If you back the right currency, you can significantly reduce the capital value of your debt.
With the pound at its strongest against the dollar for more than a quarter of a century, multi-currency mortgage specialist ECU Group has converted its entire loan book into US dollars.
Cormac Naughten, director, says ECU Group expects the dollar to weaken even further against sterling.
But rather than convert a loan into a currency you think has hit rock bottom, the way to benefit from foreign currency-denominated loans is to catch the currency on its way down, says Ray Boulger of John Charcol mortgage brokers.
Foreign currency mortgages change the underlying currency of your mortgage loan to a different mainstream currency such as US dollars, Japanese yen or euros. Monthly repayments are made by you in sterling, which is then converted to the currency the mortgage is in and used to pay it off.
Loans managed by a debt manager can be switched regularly between currencies such as the pound, dollar, Canadian dollar, Swiss franc and euro, based on macroeconomic views.
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