Allow me to introduce myself, my name is Alan Macdonald and i work with OFS Spain in the Costa Blanca.

We have recently added a new mortgage product to our vast list of services.

If you are planning to purchase or own residential property in Great Britain, Spain, New Zealand and selected locations in Australia, Canada or the USA this mortgage is ideal.

Its aimed primarily at 2nd home owners and property portfolio owners.

We can secure rates as low as 1.6% and 3.5% by utilising foreign currencies.

You may have heard of multi currency mortgages before but if not i will explain further.

A currency mortgage is when a bank lends you money for a mortgage in an alternative currency other than British Pounds. Most banks will favour mainstream currency such as US Dollar, Australian Dollars, Swiss Francs, Euros or Japanese Yen.

The reason for doing this is the interest rates, the UK has a higher rate than alot of other countries, look at the list below to compare.

Current UK Libor interest rates are 5.95% (as at 27/04/07)
Current Euro Libor interest rates are 4.28% (as at 27/04/07)
Current Yen Libor interest rates are 0.82% (as at 27/04/07)
Current Swiss Franc Libor interest rates are 2.63% (as at 27/04/07)

The ratio of loan to value is 75%

The loan is provided on a Status basis and we can take, rental income, pension and investment income along with normal salary income into account.

Think of the interest savings alone.

FX Risk

Borrowing in low interest currenceies has an immediate benefit of paying less interest but there is an inherent foreign exchange risk attached to borrowing in another currency.

If the currency you are borrowing rises against sterling, the size of your debt will increase proportionately.

Worst Case Scenario, you should be capable of accepting a 15% increase in the size of your debt but bear in mind the "savings of interest" over the term should outweight any potential loan increase.

We outsource our currency risk management to a London based organisation called the ECU Group.

ECUs experienced currency management team manage the currency of your debt on a discretionary basis with a view to limiting currency losses and maximising currency gains.

Your lending bank will set a level at which they have the right to convert your managed mortgage back into sterling to prevent further currency losses. This level is called the "conversion limit and is typically set at 15% above your agreed loan.

You may withdraw from the programme and convert your loan back into sterling at any time in order to ensure that you are no longer exposed to debt increases through adverse foreign exchange movements.

With the savings in interest we would suggest puting together a savings plan to maximise growth further.

Example

This example will show you how a Managed Multi Currency Mortgage works and how over a period of time your loan could actually reduce.

Key
JPY = Japanese Yen CHF = Swiss Franc

6th Jan 2006 Client draws down ?150,000 mortgage and converts to JPY at 201.6.
They now have a JPY mortgage of 30,240,000JPY being charged at 1.63% (rate at 06/01/06).
First 1/4 payment made on 6th April, payment is ?611.25 at 06/04/06 exchange rate.
Amount would have been ?2381.25 if loan value was kept in pounds.
Quarterly saving of ?1770.
Second 1/4 payment made 6th July, saving another ?1770.
Third 1/4 payment made 6th October saving another ?1770.
6th October we take advantage of the weakening Yen at 222 and switch it across to Swiss Francs (CHF).
New Borrowing after switch equates to ?136,216.00 at 06/10/06 exchange rates.

Interest only savings over 9 months equate to ?5310.

Capital Reduction equates to ?13,784 or 9.1%.

Total saving over 9 months is ?19,094 or 12.7%.

As confirmed above this saving per annum could be invested to provide further capital growth.

Ive given you a lot of information to digest.

If this product is of any interest to you please do not hesitate to contact me.

We are puting a website together to showcase this product and this should be online within the next couple of weeks. Meanwhile you can email me at alan_ofsspain@yahoo.com.

Thank you for taking the time to read my posting.

Alan Macdonald
OFS Spain
www.ofsspain.com

So you specialize in carry -trades. Do you use a hedge fund or do it by yourself?

We tend not to get into the FX Risk side of things as it is a very specialised field.

Therefore we outsource our Risk Management.

wow,

this product sounds excellent. what are the risks apart from the fx risk? What are the chances of the bank repossessing properties?

Well it depends what you deem to be excellent in my view. Basically you are 'punting' the currency markets by taking out a product like this. YES they are professionals, but believe me when I say that professionals get it wrong regularly. I work within the markets division of an investment bank, and there are as many views on which way currency pairings are going to move as there are people working there. If you are happy with taking the risk that you could be forced to convert back to sterling with a larger mortgage than you started with then by all means look into it, but do realise that all you are doing is trading currencies. These style of mortgages can work to pay your mortgage off quicker, but can also bite you on the ****. I personally wouldnt be happy with someone else trading my mortgage as your gains on buying a property in the right location could be offset by losses on bad trades by people over which you have no control. Not being negative, just make sure that you understand the risks before going ahead should you choose. If you look at historical moves in currency pairings its not unusual for large volatile moves, so i would be careful with the 'level set at which the bank can forcefullly convert you back to GBP' - if we are talking a 10% loss, you could find that you are stopped out and converted very quickly (as a worse case scenario).

To be honest most of our existing clients stick with Swiss Francs as the interest rates and exchange rates are very closely correlated with the Euro.

Most of our portfolio clients basically see the benefit of saving 3% per annum on their Whole Portfolio and with this saving buy more houses.

If in the long term they end up owning slightly more, they offset that increase by the amount of money they have saved on interest over the years.

Each individual has his / her own risk profile and will know themselves wether or not they can or cannot afford to take any potential risk.

We are fully qualified and certified Financial Advisers that have worked both onshore and offshore and will (as you know) complete a full fact find, inform all clients of all potential risks and will not proceed without a clients full understanding of the product.

There is obviously no obligation, so consultations are free. Ask as many questions as you like when we are there.

Its worth looking into, at the very least.

Also, i forgot to mention; we use a company called ECU Group for our currency management, please visit their site at www.ecugroup.co.uk.

Please visit here to see past performance figures.

http://www.ecugroup.com/aspx/Site_Content....id=2&mid=51

This graph shows us that someone who took an "interest only" mortgage of £1,000,000 in 1988, has by 2006 paid off their mortgage and also has a surplus amount of just over £200,000.

The product provider we use has changed the product slightly in the last couple of days and i can now confirm the following:

Properties they will consider for mortgage / remortgage can be from the following countries:

UK
Spain
France
New Zealand
Portugal
Dubai (only agreed developers on agreed developments, please contact for details)

and selected states or territories in

USA (New York , Washington State, California , Colorado , Connecticut , Florida , Hawaii , Nevada , Oregon and New Jersey)
Canada (in British Columbia , Ontario , Quebec , Alberta)
Australia (Western Australia , New South Wales , South Australia , Queensland , Canberra and Victoria)

The provider will lend up to 4.2 times single or 4.0 times joint income.

If you are looking for a mortgage in any of these locations, we advise you contact us, as the LTV has ever so slightly changed depending on location.

Sorry for any inconvenience this change may have caused.

Alan Macdonald
OFS Spain

Alan I would be interested once you add some emmerging markets, for example Morocco, Germany, Estonia, Montenegro.

Not much interest for me any more in markets that have had all the easy juice extracted, although some US property markets I am told have crashed - but its hard to know whether this is the case and how much further it will fall.
The UK market is of course precarious (Japan had higher population density, limited buildable land space and near zero rates yet prices fell every year for 15 years).

As financial advisers you will hopefully be mindful of the oldest business mantra - "buy low sell high", not "buy high and hope for more"

If you don't ask you don't get. BTW sorry I didn't have time to read it.

Yes lets price foreigners out of their own country now that the UK have priced their natives out!