Swiss Franc Mortgage

Financial questions answered by Independent Financial Advisor Mark Nowell

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graham
Posts: 1
Joined: 02 Jan 2010 18:32

Swiss Franc Mortgage

Post by graham »

Unfortunately we have agreed to buy a property in Tersefanou and we were advised to finance this by way of taking out a Swiss Franc Mortgage by our developer and our bank in Cyprus. Taking this option now looks to be an error of jugement on our part. Exchange rates have had such a severe effect on our payments that any idea we may have had of a good investment has been shattered. Has anybody in a similar situation any suggestions please. As with many people buying in Cyprus we are not getting any support from our lawyer
Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth »

Hi Graham and welcome to the forum,

I've sent you an email with someone who may be able to help. Unfortunately a lot of people have been caught out with the poor exchange rate in recent times.

Regards,
Nigel Howarth
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Jammin
Posts: 2
Joined: 06 Jan 2010 15:16

Re: Swiss Franc Mortgage

Post by Jammin »

Hi Graham,

I too have signed up to a Swiss Franc mortgage though payments aren't due to start for another few months.

I was told various figures when arranging the mortgage (approximately 300 euros per month I think), but have no idea how the exchange rate fluctuations in the last 18 months will have affected those. When you talk about the rates having a severe effect on your payments, what kind of scale are you talking about? I haven't yet done anything about this and don't know whether I should be concerned or not.

Thanks,

Ben
julie
Posts: 10
Joined: 31 Jan 2009 15:15

Re: Swiss Franc Mortgage

Post by julie »

Hi Ben

The difference will depend on what you were expecting to pay based on how long ago you last looked at the rates

You mention a figure in euros - was that the euro equivalent of the Swiss Franc repayment? If you're based in the UK and paid in £'s then it's the exchange rate with sterling that will matter. The repayment will be fixed in Swiss Francs - but it's the amount it will cost you to buy those Swiss Francs that will vary and that depends what currency you use.

We also took out a Swiss Franc mortgage - at the start of 2007 when you got 2.39 Swiss Francs to the pound, a year later in was 2.19 / £ and then it just got worse (up and down a bit but mostly down) it's currently 1.65 / £ and given that we're paid in £'s this has increased our repayment ( and debt!) by 45%

I.e a Swiss Franc mortgage with a repayment of the equivalent of £1000 in Jan 2007, would have cost £1330 in Jan 2008 and about £1450 currently

We've still got a few months to go before repayments start and I suppose there's a chance things will improve but I've been keeping an eye of the rates for the last year without a glimmer of hope

If your income is in euros then things aren't so bad, the Swiss Franc is a little stronger against the euro than it was in 2007 / 2008 ( 1.48 / euro now against 1.61/ euro in 2007) so the repayments will have gone up a bit - by about 8%

Hope that helps ( and doesn't depress you too much)
Julie
sitarist
Posts: 1
Joined: 06 May 2010 18:50

Re: Swiss Franc Mortgage

Post by sitarist »

Hi all,
I have just joined this forum and wanted to know if anybody had a good person to contact to discuss the possibility of changing the currency of my mortgage to either a Euro or Sterling. I took out a swiss francs mortgage when it was a good thing to do but no longer is the case.
Any advice would be much appreciated.

Sitarist
Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth »

Hi Sitarist

I have sent yo an email.

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Nigel Howarth
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James2
Posts: 1
Joined: 21 Jul 2010 16:59

Re: Swiss Franc Mortgage

Post by James2 »

Hi Nigel,


I have just joined and noticed that you sent an e mail to some of the people on the forum regarding assistance with their mortgage.

I wonder if you could share the same information with myself.

We're in a right pickle with our property due to complete in the new year and any help you could point me in the direction of would be most appreciated.

Thanks and kind regards..
Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth »

Hi James,

I'll send you an email with the name of the company and contact details.

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Nigel Howarth
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tucano
Posts: 6
Joined: 08 Jan 2011 11:35

Re: Swiss Franc Mortgage

Post by tucano »

Hello Nigel,

Have been looking over these questions and answers: I have 2 mortgages - one in Euro (hooray!) the other in Swiss Francs (boo!), taken out when it was pretty good, only to see it plunge dramatically after a fairly good run. Can I have some of your useful tips by e-mail as well please...

Thank you, great site BTW.

Tucano
Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth »

Hi Tucano & welcome to the forum,

I have sent you an email with the contact details of someone at the eastern end of the island who may be able to advise you.

She has written to me in the past about the possibility of switching from CHF to another currency. This is what she said:

"Now is really not a good time to change your loan from CHF to another currency. The CHF is extremely strong at the moment and if you change currency you will crystallise your loss. Also if you took anything more than a 60% loan at the time of purchase it is unlikely that you will be able to change currency without an injection of capital to reduce the current loan to value to less than 70%."

But having said that, she may be able to find a mortgage provider who can offer you a better deal.

Regards,
Nigel Howarth
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jaspers dad
Posts: 10
Joined: 07 Jun 2009 15:41

Re: Swiss Franc Mortgage

Post by jaspers dad »

I too have a Swiss Franc mortgage. I am currently trying to change to Euros with the provider (Marfin). It will cost about 1800Euros for the privilege. After seeing your last advise & after months of worry whether to change or not I am once again in a quandry. When I first enquired in Oct 10 my repayments had shot up to CHF1570 (£1033 today) I was quoted
approx 1000Euros as the new payment(£846 today). This would be on a Euribor 6month + 4.2% (5.333% then) basis. Seeing the difference in sterling was a no contest but not actually understanding any of these rates is making me wonder if I am making yet another mistake that will cost me in the long run.
Any Advise would be appreciated.

Thanks Paul
Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth »

Hi Paul,

I suggest you contact Sarah Hordle at http://www.essentialconsultantcy.com/ - the information I posted above was given to me by her.

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Nigel Howarth
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IanB
Posts: 3
Joined: 03 May 2011 11:01

Re: Swiss Franc Mortgage

Post by IanB »

Hi there,

I am in a similar situation with the Swiss Franc mortgage, what advice can you offer?

Thaks, Ian.
Nigel Howarth
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Re: Swiss Franc Mortgage

Post by Nigel Howarth »

Ian,

I spoke with Sarah Hordle (see earlier message) a couple of weeks ago. A number of people have contacted me wanting to switch their mortgage from CHF to another currency - this is what Sarah had to say:

“Now is really not a good time to change your loan from CHF to another currency. The CHF is extremely strong at the moment and if you change currency you will crystallise your loss. Also if you took anything more than a 60% loan at the time of purchase it is unlikely that you will be able to change currency without an injection of capital to reduce the current loan to value to less than 70%.

I am afraid that the only option at present is to sit tight and do your best to make the payments. You can ask your bank for a reduction to interest only for a year if the payments are causing you distress. The banks are quite willing to work with their clients to reduce the monthly burden for a short period at least.

A large majority of people who purchased or mortgaged since 2006 have loans in CHF. The interest rate was significantly lower than that of the local currency (CYP or EURO depending on the time of purchase) but the financial crisis has made the Swiss Franc a very attractive currency.”


Regards,
Nigel Howarth
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maurice
Posts: 17
Joined: 31 May 2011 09:56

Re: Swiss Franc Mortgage

Post by maurice »

I have read various advice about swiss franc mortgages but the exchange rates are now becoming ridiculous! 2007 44p May 2011 70p Original Mortgage £59125 Currently £96250 and getting worse by the day! How long should we "sit tight" or should we convert to Euros and crystallise the debt? We are now being asked to sign for transfer deeds which will incur further costs on a property which is unsaleable. At which point do we say enough is enough!
Come and get us!!!!!! If you are in the same boat , please contact me to share info and if you can help, please do so!
Maurice Cook
Also what are the chances of the Swiss franc weakening? In 2000 it was worth 39p and it has not repeated that value in 11 years since but has increased steadily through the period.
I have no confidence that things will change but the Euro has every possibility of doing so.
Who would advise against converting the mortgage to euros?
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