If you live in Northern Ireland, for example, but work for a company across the border in Ireland, the changes will apply to you as you will be paid in euros and are now seen as requiring something called a Foreign Currency (FC) mortgage.
What exactly is a Foreign Currency mortgage?
In a nutshell, if you gain an income in a currency that is different to the one that applies to your mortgage, you will now require an FC mortgage, and it doesn’t matter if you live in the same country that you require your mortgage in, either.
Even if you only have shares in a company overseas that you are hoping to cash in to pay off some of your mortgage, particularly an interest-only one, this will still be classed as an FC mortgage.
Why have these rules been brought in?
For both buyer and lender safety. If the exchange rate between the two currencies that relate to you, moves by more than 20% either way, you could now have the right to move your mortgage to an alternative currency, i.e. the one relevant to where your property is., especially if you can prove that the new rates mean that your payments are no longer affordable.
Won’t this put lenders off?
Due to the amount of monitoring of ever-fluctuating exchange rates these mortgages require, many lenders have withdrawn from the foreign income market.
Another reason that lenders will be put off is because, due to your ability to now switch currencies should the exchange rates determine, the currency risk now sits with them and not you.
However, there are still many lenders that are continuing to offer mortgages to foreign currency earners. It is imperative that you speak to a professional mortgage adviser regarding this change and Foreign Currency mortgages, particularly if you work in a different country to the one you reside in.
Michael Lawlor is from (Mortgage Advice Bureau – for further information call: 02083431777
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