Currently overseas and noticed banks in Germany offering loans at 2.46%. Did a quick search and did not find any information about borrowing 500000+ from overseas to fund Australian investment property purchase. I believe that other countries interest rates are lower than Germany
Does anyone know if this is a viable option compared to paying 6% on Australian finance. I assume either it is not possible , or that there are other costs or issues that make it uncompetitive, but do not have any real facts.
If 500000 is not enough then is it be an option to borrow a million, invest extra 500000 and make a profit on unused loan balance
Thanks
Dumbest way to finance property.
No .. seriously .. its as dumb as they come.
One of the reasons that Germany has a low rate at the moment is because it is inherantly stable and cannot find lending partners due to the current EU crisis. One of the reasons we have a significantly higher rate at the moment is because we are not so badly affected by any of the EU stuff.
So at the moment we are at an abnormal high .. and they are at an abnormal low. Guaranteed .. circumstances will change to put that back into place. One way or the other.
You see .. its all happened before. In the latter part of the 80s people were convinced that getting a foreign loan from Japan was a great idea because of the significantly lower rates. Well .. the yen went from around the 110 yen to the 80 yen to the dollar .. pushing up repayments on these 'cheap' loans by about 40%. And a lot of 'smart' farmers and risk taking investors went to the wall. Crying all the way .. complaining how badly they'd been informed etc etc .. but they lost the lot.
Granted that our currency is abnormally high and places like the US and EU are abnormally low at the moment .. wouldnt it seem more logical to invest in that direction? I'm more positive that the crazy US markets and the el-cheapo EU markets (Spain in particular) will be the ones reversing.
Gear yourself appropriately for what you can visualise as the ongoing trend, rather than the abnormal.
If you were working overseas and earning in that currency that you are borrowing in then it is possible. eg. NAB Japan used to lend up to 70% for aussies working in Japan at around 2% secured by Australian property. many conditions though.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
St George withdrew their Foreign Currency product some years ago which was a shame because it was a good alternative for clients earning non AUS $.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Yes, I appreciate your comments and thinking about it more they make sense, hypothetically when our exchange rate drops to 60 cents in the US dollar it would be a better option.
Warek
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