EU Mortgages

[jklondon]

Looking to invest in Central Europe - done my homework I think I can realistically get 8%+ yield in the right parts plus a good change of a decent captial return.

My question is what would people suggest is the best way to finance this given that I probably wont pay for the property upfront?

I am looking at a Euro mortgages but given my earnings are in £ I will obviously have some FX risk - nevertheless assuming the property is always rented out and covers the mortgage then this wont be an issue right ?

Interesting to hear from others who might have gone down this road or are thinking about this.

Cheers

JK

 

[chump]

There are two broad approaches..
1.Finance o/shore purchase against an existing UK property assuming you have one. Loan and asset are then in the same currency and FX is not an issue except on the rental revenue stream which is minimal as you will be using that stream to settle local costs. Anything left over is a bonus that can be converted back to sterling over time averaging out any fx.
2.O/shore finance in the currency of the o/shore property. The latter however is an fx issue. The foreign currency can swing for or against you to some unknown degree whilst your UK earnings that are used to redeem the loan are a 'fixed' component.
Option 1 is the reduced risk approach although it should be added that this has no effect upon the future realisable value of the asset being purchased.