Buy in UK (or other country) with mortgage in Singapore?

[Fat Bob]

Anyone done this? Thought about it before, but oppurtunity has come good so would like to explore more.

I take it most the international banks will do this, plus things like LloydsTSB, RBS, Barclays who have people over here. Anyone else I should contact?

Anyone got any advice? Well, advice that's worth listening too?

[Lichtgestalt]

You will have a bit of a FX risk depending on how you repay the mortgage in Singapore (assuming it's gonna be in SGD). The portion you repay with your salary will be fine (as that is also in SGD) but if you planning to repay part of your Singaporean mortgage with the rent you get from the property overseas then you face the risk that the currency of the country where the property is will be fluctuate compared to SGD which means that you might have to top up that portion from your salary.
The other issues might be that you will have to provide some sort of collateral for the mortgage and if that is the porperty overseas then you have to make sure that this is legally possible and accepted by the bank.

[Fat Bob]

Ta! Plan is to pay directly out of salary, with no input from the rent (except if the exchange rate is good, then I'll transfer over lump sums).

I did hear that even if you pay in SGD then there is still some exchange rate exposure. Will have to figure out what that meant. Know what you mean by collateral, will more than likely have to take out life insurrance etc as well. Bugger.

[baloo]

People I know who have done this were quite pleased with the local Lloyds TSB people. I haven't used them myself.

[Burbage]

You'll still have to deal with the exchange rate on the day of purchase. In effect, you buy a house for 1 million gbp which might = 2 million SGD, but if the exchange rate shifts the cost in SGD could be 2.5 million. In effect the loan amount isn't fixed until the day of purchase.

[BoD]

I would say a "lot of FX risk".. The monthy payments are one thing, but what could kill you is what happens when you pay off the loan before maturity. If GBP has depreciated against SGD, then the value of your asset is going down in SGD terms while your outstanding loan amount remains the same, you could quite possibly end up owing the bank a lot of money.

Say today GBP/SGD = 3

You borrow SGD 1m and then convert to GBP 333k and buy a house for 333k

In a years time, property prices have not changed and you decide to sell

GBP/SGD is now 2.5

You still own the Sing Bank approx 1m (less a bit of paydown)

You sell the house and get GBP 333k

You sell the GBP and buy SGD and get S$833k

You then have to find another S$177k to pay back the bank

Of course if GBP/SGD goes to 3.5, you will make out like a bandit/ Given the Sing gov policy to allow gradual appreciation of SGD against trade weighted currency basket, this seems unlikely



There will be clauses allowing you to switch currency. Look v carefully at these


Any cash you tranfer from SGD to GBP also gives you an FX exposure if you regard SGD as your base currency

[Burbage]

On the other hand if you get a UK mortgage you get stuffed by the FX with your repayments.

The low interest rate in Singapore certainly makes up for a lot. It's well worth looking into seriously.

[BFG]

RBS were very helpful when I looked into this and they do allow you to pay in different currencies.

[Fat Bob]

See what you're saying, BoD, but it may not be too much of an issue. Only reason I would sell the UK property is if I wanted to buy else where in the UK, i.e. a forced move back to the UK due to lack of employment over here. I'm not so worried over that for the immediate future (2 years) and will ask whether it's an issue should that very situation occur.

Thanks BFG, yes, heard RBS and Lloyds TSB are the ones to talk to. Will also give HSBC a chance and also Citibank, my new prefered bank in Singapore!

[Sandwich of Cheese]

If you sell the property and buy in UK again, you still have to payback the SGD loan and then reborrow

[Possum]

Why don't you buy in Singapore?

[Fat Bob]

Nah, not in SG. Too bloody expensive.

[Bob the Builder]

Another issue to think about at the minute is if you have bought a property in the UK and are financing it in another currency (eg Sing) at the minute, you might get requests for top up payments from your bank, since the LTV percentage may exceed the threshold because of the declining Sing dollar value of the UK sterling asset.

[Fat Bob]

OK, let me see if I get this right.

I buy a house for GBP125k with a SGD mortgage covering GBP100k, 80% of the value.

That would mean at current exchange rates I borrow S$276k (+/- change) on a house worth S$345k

If the rate goes down to S$2.50 to GBP1, then my house is now worth S$312k with an outstanding mortgage of around 90% of the price.

Is this where the bank turns around and say "we are bastards, we lent you money for an 80% mortgage and your mortgage is now 90%. Give us that 10%"?

So what I've got to worry about is the FX rate going down considerably rather than anything else?

Oooooo, could be fun!

[Bob the Builder]

Tick, go to the top of the class and sharpen the pencils.

[BoD]

However if you tell them that you are a shrimp fisherman from deepest darkest Lousiana, have no cash, no disposible income and a very unstable seasonal income, then they will happily lend you 100%

[baloo]

110% even.

[Morrolan]

However if you tell them that you are a shrimp fisherman from deepest darkest Lousiana, have no cash, no disposible income and a very unstable seasonal income, then they will happily lend you 100%

well, you could be Tom Hanks in disguise doing a strange movie about a running man...

[BoD]

Great slogan for First Federal Savings and Loan bank of Little River Bend Lousiana - "Borrowing money from us is like a box of chocolates ..You never know what you are going to get"

[kittykat]

I did it FB but be careful and watch the currency fluctuations. I didn't move my funds at the right time and took a short-term hit so be careful. You can do very well if you can whack as much capital as you can on while you are in the stronger currency. At the moment the AUD is so strong I'm leaving my mortgage parked in Oz then will bring it out when it hits around $1.25. Have funds as a backup in case there's a call done as well.

I'm actually starting to look for another property in Oz now and will probably go for a Non-Residential loan.

Good luck mate!

[Bob the Builder]

KK if you were now to switch you loan to being denominated in say Sterling, which may continue to fall in value further, you would be in the previously described position of making out like a bandit. Plus, AUD interest rates are on the rise, Sterling rates are on the way down

[kittykat]

Thanks Bob... Just read this... Let me go investigate. I like!

[goingaroundagain]

I did this on a UK property in the 90's borrowing the cash in Japanese Yen due to the massive interest rate differences. I worked in derivatives at the time and went about trying to sort out a cross currency swap for the JPY amount to hedge the FX risk but the market wasn't developed enough at the small volumes. Could have got a forward rate out a couple of years no problem but eventually got a separate GBP/JPY swap for near the right amount on the OTC market and even after paying for the swap the savings were massive. Geared up further than I could have due to the low interest rate. Surely the market today is much more developed and these things are pretty normal.

[BoD]

I don' t think that any Singapore banks offer such services to retail customers (happy to be proved wrong)

[TheD]

This thread just came back to me and I've been waiting for someone to tell you this, but as no one has brought it up...

If you're thinking of buying anytime soon, I'd say wait until the end of the year (at least), preferably early into next year before you buy.

The BOE is warning that the US price slump has hit England and even if there is not a general market panic and bust mortgages, it will start to appear soon IMO.