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22/09/2008 The mortgage multividisa, Now it begins to be an option!
One is a product very demanded lately and especially commercialized by Bankinter in Spain. In the first place we are going to see of that it consists and we will analyze later it, because the base of this product is that it has two legs:
- Financing, by the mortgage of our house.
- Investment, to finance us in another currency (Yens for example). What we are doing is to sell given them Yens when requesting. We make the following investment: we bet to that if the Yen is depreciated we made money and if is appraised we lose, it.
It consists thus, in asking for a mortgage in which the money instead of to lend us it in Euro normally gives us in another currency Swiss Yens or Francs because both have low types of interest (to the date of the article the types of interest to a year were in 0.89% and 2.97% respectively.
As the types of interest are low, our quota is reduced significantly. In addition it gives the possibility of changing the currency us of our mortgage if we think that it can interest to us to return it to have in Euro or another currency.
Up to here all perfect one, but we have two risks:
- Ascents of types of interest in the currency that we have taken what the quota would raise. This risk is intrinsic to the variable mortgages to types and they have already undergone it many buyers with the ascents of the types in Euro of the last years.
- Appreciation of the currency in that we have contracted our mortgage multidescries. If this happened, we would need to pay more Euro to give back to the same amount of Yens or Swiss Francs reason why our quota would raise without the need that the types of interest moved there.
Paradoxicalally, it is the first circumstance the one that we took from reference since short term it makes pay us less. Nevertheless in the medium and long term it does not have because to be thus.
Ejem. A person buys a house by 240.000€ and requests a loan of 200.000€ in a mortgage multidescries in Yens (type of change 160 Yens/Euro) to 25 years reason why the bank gives 200.000*160=32.000.000 Yens to him. If an annual interest 1.89% pays, its monthly payment will be of 133,715, 65 Yens, that to the type of previous change would be 835,72€ (what it would receive to him in bank in the account. If it had requested it in Euros to 5.50% the quota would be of 1,222, 57€, reason why is saving a 32% of quota.
Nevertheless, soon after the Yen would be appraised and the type of change happens to 130 Yens/Euro and the types of interest begin to lower in Euro, their quotas happen to be 133,715, 65 Yens that now are 1,028, 58€, nevertheless the quota in Euro would lower reason why the difference no longer would be significant. However if we wanted to sell the house if we would have a problem since we would have near the 32.000.000 Yens that to the new type of change of 130 Yens/Euro would be 246,153, 85€ more than it cost to us.
We see that most important it would have to be to pay attention to if the last years the currency in which we are going to request the money it is appreciated or depreciated with respect to the Euro, if very it is depreciated will not compensate to us because most probable it is than it takes the opposite way. If we watched the graphical associate, we see as the last years the Yen has been depreciated systematically with the Euro reason why the way could be the opposite.
In conclusion, as the mortgage multidescries is an investment, most important it is if what we bought/we sell is expensive or cheap. We what we make when contracting a mortgage multidescry is to sell Yens to very long term (25 years). As We sell we must try to make it most expensive possible (than the currency he is appreciated possible). Like until now, the Yen had made the opposite right (it has been depreciated), we do not have to contract it, at least until the Yen or another currency much with the Euro has been appraised.
If we see the Evolution of $/€ it happened of 1.16 (1.16 Dollars to buy a Euro) when the Euro was created up to 0.82 (the Dollar was very appreciated, would be the moment for requesting it) and returned until 1,60. We had contracted IF it in Dollars 0.82 we had changed and it to Euro to 1.60 the main one of our mortgage would have been reduced to half.
Ejem. We request 200.000€ that would be to 0.82 $/€ 164,000, 00 $, after 5 years the change happens to 1.60 $/€ reason why we must 164,000, 00$/160=102.500€. Elprincipal of our mortgage in Euro will have been reduced to half.
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