UK banks lending to African mortgages?

[Djtemeka]

I'd like to buy a property in South Africa in the near future. My only issue is South African banks are over 9% and uk are far lower. Are there any uk banks that lend on African properties?
I understand that Hsbc lend to Greek, French, Turkish and one other but that's euro properties.

Thanks
J

[sidicks]

Djtemeka said:

I'd like to buy a property in South Africa in the near future. My only issue is South African banks are over 9% and uk are far lower. Are there any uk banks that lend on African properties?
I understand that Hsbc lend to Greek, French, Turkish and one other but that's euro properties.

Thanks
J

What currency do you want to borrow in?

[Djtemeka]

I wouldn't know. I would assume Rands as that is what the SA banks would want. I'm assuming there would be a rather large charge for me to swap sterling to Rands.


Loan amount would be around £100 000. (R2 000 000)

[sidicks]

Djtemeka said:

I wouldn't know. I would assume Rands as that is what the SA banks would want. I'm assuming there would be a rather large charge for me to swap sterling to Rands.
Loan amount would be around £100 000. (R2 000 000)

Somewhat broadly:
If you want to borrow in Rand you will be paying Rand interest rates...

[Djtemeka]

ok. How does it work with the euro properties then? They get bought in Euro but on a uk bank funding? Or are the banks like Hsbc in those countries too?

Thanks

[sidicks]

Djtemeka said:

ok. How does it work with the euro properties then? They get bought in Euro but on a uk bank funding? Or are the banks like Hsbc in those countries too?

Thanks

Not my area of expertise, but for a start the ability to hedge EUR/GBP is much easier and cheaper (less volatile) than ZAR. The legal jurisdiction probably makes a big difference too.

[marky1]

They probably lend in EUR on Euro properties. I would imagine unless you borrow in South Africa you will struggle to find a bank who will lend Rand. Cheapest way if possible is borrow on your UK property, change it to Rand and then hedge your FX exposure, or just borrow in South Africa and pay the 9% rate.

[gibbon]

Djtemeka said:

I wouldn't know. I would assume Rands as that is what the SA banks would want. I'm assuming there would be a rather large charge for me to swap sterling to Rands.


Loan amount would be around £100 000. (R2 000 000)

Have you seen rand fx moves recently? Never mind the interest rate, your fx risk would be massive.

If you earn in £, then release some equity from a uk property at a nice low interest rate if you can, and exchange and pay cash in rand.

[sidicks]

gibbon said:

Have you seen rand fx moves recently? Never mind the interest rate, your fx risk would be massive.

If you earn in £, then release some equity from a uk property at a nice low interest rate if you can, and exchange and pay cash in rand.

Possibly not a bad time to purchase ZAR at 22/£ !

[Djtemeka]

It IS a gamble on the rand side of things. It's been at R20/£1 before then dropped back to R11/£1 and now back again.
Hence why I wanted to borrow sterling as its far more stable and easier.
If I bought in Rand and had to pay overseas and the Rand recovered, my repayments would double!

Problem is, I don't own a property. This would be a first time buy for me hence why I have no idea how to do this.

Thanks


J

[gibbon]

sidicks said:

Possibly not a bad time to purchase ZAR at 22/£ !

Yah, it is, but its a hell of a risk, if SA dont sort themselves out the property itself could easily be worth essentially naught.

[anonymous-user]

Borrow in the currency you are getting the money to make the repayment in, so if you are paid in pounds, borrow pounds (on UK property?) if you have rand income borrow in rand and take the interest rate.
I have property in a few countries and the above is a good rule of thumb

[Pints]

Be cautious about buying in SA at the moment. Potential changes in law may not be in your favour in the near future if some of the comrades have their way.