Is it possible to take out a Euro mortgage on a UK property?

[Jonny69]

Question: Is it possible to take out a mortgage from a European bank (e.g. France) in Euro on a UK property? I'm not sure if I'm having maths fail here, but if you take out a Euro debt while the UK currency is weak, when the UK currency becomes stronger the value of the debt in GBP should be smaller?

A very simplistic explanation, discounting any interest rates, charges or payments:

You need £100K for a UK property. You use a French bank and take the mortgage out in Euro. The current exchange rate is €1.1 : 1£. The debt is ~€110K sat in a French bank.

When the exchange rate becomes €1.2 : £1, you still have a €110K debt in a French bank, but it is now worth £92K.

If you get lucky and the exchange rate hits €1.4 : £1, the €110K debt is now worth £79K.

...which is about £30K difference, even if you have to wait 5-10 years. You could then switch the mortgage back to a UK bank and shave £30K off the debt.

Or have I completely missed something here?

 

[Jonny69]

With a mortgage you're looking at a 5-10 year commitment, so it doesn't matter if there are a few blips in the meantime. Like I said, if the rates go back to 1.4 it shaves £30K off the debt. Something would have to go seriously wrong in that time to make up that amount. A stronger Euro or parity for a few years won't do it.

Edit: Fox, you're an accountant or something aren't you? Presumably you've posted that as a loaded question because you already know the answer. I don't. Please expand a bit...

 

[Jonny69]

Ok, so it seems I am right on the economics side, with regards to changes in the exchange rate. What might not work is the potential charges each month from the currency conversion and direct debit, also because it might need a foreign bank account which also might have its own charges. Assuming they come in at less than the change in the debt, then the theory works.

I can't believe you all think the Pound will never rise to the levels it was when the Euro started. It's a very short-termist view to have. The pound is weak compared to the Euro at the moment; it's the worst it's ever been!. As soon as we and they (Euro zone) return to normal the exchange rates will be as they were. It'll probably take no more than 5 years and certainly won't take 10. And even if it does, it's a mortgage! You take them out for 20 years or more!

 

[Jonny69]

How though? It's as likely to go down as it is go up, which would increase your debt in sterling terms?

But that's why you only convert it back to pounds when the pound is stronger. 1.4:1 might be a bit keen but it's delusional to think it'll never even go back to 1.2:1 and that's nearly £10K on a £100K sum.

Anyway, I'm not entirely sure why some of you think 'I'm taking a huge gamble'. It was purely a thought; I don't even have a mortgage