The multidivided mortgages

www.minus19.com

27-10-2008 | Javier Gomez

Now we take a pair of weeks in which the Euribor has allowed him a breather our ruined pockets. To today it has been placed in 5,02 % from almost 5,4 % in which it was at the beginning of month. Nevertheless, the increase in almost a point from the beginning of the years has stopped to our very injured economies. It is raised of the interest rates, together with the economic desaleración so strong that it is taking place it motivated that the banks were studying the ways of improving his offers with a few products that could turn out to be more profitable for his clients, and this way, with the step of the months, the multidivided mortgage has been becoming more and more popular.

What is the multidivided mortgage?

There are mortgage loans that we can hire in one or several different currencies. We already do not have why to limit ourselves to the euros, but we can sign our mortgage in yenes, in dollars or in pounds sterling, or in several of them, for putting an example. On having been signed in another currency, the applicable interest rate will not be already the Euribor, but the Libor (if you are interested in, it is the London InterBank Official Rate), that is to say, the interest rate that the central banks of every country apply to themselves between themselves. To this Libor, as there happens with the Euribor, is applied to him a differential that generally is usually higher than that of a normal mortgage.

On the other hand, we will have to bear in mind the exchange rate of the currency in question with regard to the euro, and the volatile nature that this one has.

How does it work?

We must bear in mind these two factors that they will affect along his life to our mortgage.

- The interest rate

Since they will apply to us the Libor of the corresponding country, we will have to look for a Libor that is perceptibly a minor that the Euribor if we want to benefit. For example, at present, since we have said, the Euribor is to 5,02 %. Let's suppose that we choose a mortgage in yenes. Well, since the Libor in yenes is in these moments 0,93 %. We must bear in mind that ideally, in the mortgages in euros they will apply a differential of 0,3 to us, therefore right now our mortgage in euros would be in the environment of 5,02 % + 0,3 = 5,32 %, more or less, ideally. In case of the multidivided mortgages, the differential is usually higher and is applied between +1 and +2. Let's put the worst (+2), therefore at the worst, the interest rate applicable to a mortgage in yenes would be 0,93 % + 2 = 2,93 %.

Nevertheless, we must not forget that we must have studied the possible evolution that is going to have both the Euribor and the Libor of the country that we choose, since for example, the current forecasts are that the Euribor keeps on going down more.

- The currency

The second factor is the currency and his volatile nature. Probably, being able to play with her, it will be that more money makes to us to save, but look out! because also it is the one that more risk contains, since also it can do it to us to lose. To get into debt in a currency, we must do it with one that we think that his change is going to descend with regard to the euro. This way, the capital quota that we pay every month will be minor and we will amortize more cardinal. But care, because if the move goes out for us on the contrary, and the currency begins to be revalued, then our quota will be higher and higher, and we will see that our debt is major. and if not, look at what has happened with the mortgages that have been signed in yenes in the last month:

An example: in September 100.000 € were 16.000.000 of yenes approximately. To date of today, approximately, 100.000 € are approximately 11.700.000 yenes. Namely let's imagine that in September we get into debt in 100.000 euros, or, in 16 million yenes. One month later we want to return the loan. We had to return 16.000.000 yenes that is what they gave us, but now the change is 1 € = 117 yenes therefore if we apply the change … we have to return approximately 136.000 €. In one month we would have had a loss of 36.000 €.

What do we advise you?

The multidivided mortgage is much riskier than a normal and current mortgage, but you have already seen that you can save yourselves or lose a lot of money for double entry: for the interest and for the currency. Generally, in the current situation across the interest rate we will always gain him money if we choose the suitable currency. On contrary, we will have the risk in the currency.

1st If you decide to get into this type of mortgage, first of all you will have to know very well the market and continue it closely, or allow you to advise. Be always dependent on the change of currency, because one of the advantages of the multidivided mortgage is that you can change currency when queráis paying a small commission.

2nd If you want less risk, you can always choose a currency that is less volatile. To study the evolution that has had every currency in last two years and this way you will know it better. For example, Franco Suizo has had great less volatile nature than the Japanese Yen, for what it is much less risky to hire in Swiss Francs.

3rd you Always have the option to hire a change insurance, so that if you take losses as the change of currency, it will be the insurance the one that covers the backs to you. The problem is that these insurances are very expensive, and they can eat to you the theoretical profitability that these mortgages have.

4th Hire this type of mortgages, preferably, with stable currencies and low interest rates, and when the currency has a devaluation perspective with regard to the euro.

5th Aseguráos of which it is allowed you changing currency in any moment.

6th you Always have the possibility of hiring the mortgage in several currencies so that the risk muffles between all.

But ESPECIALLY, ALWAYS, realize very well, that you can go so far as to lose money with this type of mortgage.

To read more on: Mortgages, financial Products
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