A loan from abroad attracts with good conditions: where are the advantages over a domestic loan? Many inquiries regarding loans are based on taking out loans from abroad. The offers from abroad are very numerous and for German borrowers they often represent the alternative to domestic loans, not least because foreign loans often offer an advantage over a loan from Germany. Loans from Switzerland are very popular and one of the biggest inquiries. Swiss loans offer the particular advantage that borrowers can take out a loan even with a bad Credit Bureau.
Foreign loan: Foreign currency loan
The granting of loans from abroad also goes in the special area regarding the types of loans. There are also offers of real estate financing from abroad. For many, real estate financing from abroad is the alternative to a domestic loan – the conditions are usually better than in Germany. Foreign currency loans are a type of real estate financing. Foreign banks offer these foreign currency loans to make it easier for the borrower to finance the property. In particular, profitability attracts borrowers from Germany: the conditions are often better than in Germany and there is also the possibility of currency gains.
Advantages and disadvantages of foreign currency loans
But just as you can take advantage of the foreign currency loan as a borrower, there are disadvantages on the same side that can arise. For example, the currency gain can also be converted into a currency loss. This depends to a large extent on the developments in the exchange rate, ie how the exchange rate develops. It is important for the foreign currency loan that the loan amount paid is in the corresponding currency in which it was applied for. Repayment is the same: it must also be made in the foreign currency.
The maturity of the foreign currency loan is almost always due. This means that the entire amount is repaid at the end of the term. The advantages of a foreign currency loan can be of great help in financing the property, if you compare it with a mortgage loan here in Germany. The type of loan for real estate financing is known to run for a very long time, as is the foreign currency loan. In this respect, you should carefully weigh up the advantages and disadvantages before closing. In principle, you can see whether an interest rate benefit will arise from the foreign currency loan before the loan is concluded: A look at the capital market interest rates in the country where the loan is to be taken out already reveals a lot. If these are lower than in this country, this is a sign that the lending rates for real estate financing are also lower.
Use the interest rate advantage of the foreign currency loan!
This interest rate advantage should be a top priority when applying for a foreign currency loan to finance a property. Of course, it makes no sense to take out a loan from abroad if the interest rate there is higher than for a loan from Germany. Another advantage of the foreign currency loan is the currency gain, because you can skim off. This currency gain mainly has to do with the exchange rate: if the currency of the loan taken loses value, you naturally pay less when repaying it than you actually took. Of course, this also cannot be the case and you will lose money.