hi
here’s an interesting opportunity. i have 3 mortgages in nz on nz properties. i have been offered a facility by a reputable bank outside of nz involving refinancing via a multi currency facility, accessing a US (GBP, SGD etc) interest rate around 3.8%, fixed quarterly, i can flip the currency of the loan twice per year at no additional cost (bit of insurance really). the only catch is that its 20/80 LVR and my whole initial drive for refinancing was to access a facility that would free up more equity to borrow against. I’m not sure in the long run which would be better off??
I’ll run a model but in the mean time thanks for any thoughts
DKFChuckles
The facility would turn your loan into a big FX punt, doesn’t it? Does it change the currency of the principal of the loan into some other currency? If so, and your main salary, rent, etc is in Australian dollars, you lose/gain money when the FX rates move.
I thought about using a Japanese yen mortgage (1.0% or something) but I decided having that big a yen exposure to FX risk wasn’t worth it. History has shown I would have been better off as the AUD has strengthened against the Yen, but it could just as easily have gone the other way!
Alex
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