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Old 25.11.2009, 16:18
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CHF mortgage on EUR property

Hello,

Does anyone know of a Swiss or French banks that will let you mortgage a property in France in Swiss Francs. I know it is possible but so far the banks I have asked have not been able to help.

I want to buy a place in France but earn Swiss francs - so want to take the exchange rate risk out of the purchase.

Cheers
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Old 26.11.2009, 09:25
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Re: CHF mortgage on EUR property

You might want to try Credit Agricole. At least, they were recommended to me (living in Basel), if I earn CHF and wanted to buy in Germany. It might work for you.

I have not looked into it though. Just a tip.
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Old 26.11.2009, 09:50
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Re: CHF mortgage on EUR property

Yes, know a lot of people who have done the same, but not sure who they've used. I think it has to be a French lender, for liability reasons in case of default. Perhaps have a look at banks/financing companies in Ferney. Also, the listing agent of the property should also be able to refer you to someone.
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Old 13.01.2011, 09:34
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Re: CHF mortgage on EUR property

I'm also considering buying a home in France, over the border from Basel, and would like to lock in the favourable exchange rate. I found this mortgage being offered by the Banque Cantonale de Genève for purchases in France near Geneva and wondered if anything similar was on offer near Basel?
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Old 13.01.2011, 09:55
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Re: CHF mortgage on EUR property

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I want to buy a place in France but earn Swiss francs - so want to take the exchange rate risk out of the purchase.
If you want to take the exchange rate risk out of the purchase then you should NOT take a swiss frank mortgage against a property bought in euros, because by doing so you have exposed yourself to the exchange rate risk.

If you don't want exposure, which is technically impossible as your income is in CHF and the property is valued in EUR, the only thing you can do is either to get the seller to take the risk (i.e. he agrees to take a payment in CHF [highly unlikely]) or take the mortgage in CHF and get some advice on how you can lock in a rate that you would be happy with over the term of mortgage (this is not cheap and does not necessarily mean you're not exposed, just means that you are limiting your exposure).

Hope this helps.
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Old 13.01.2011, 10:09
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Re: CHF mortgage on EUR property

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If you want to take the exchange rate risk out of the purchase then you should NOT take a swiss frank mortgage against a property bought in euros, because by doing so you have exposed yourself to the exchange rate risk.
I guess it's a question of which risk you want to be exposed to.

Suppose I buy a house today for EUR800k, but earn a salary in Swiss francs. I have two choices:

1. Take a mortgage in EUR. By doing this, I expose myself to the risk that my mortgage payments can increase (or decrease) in CHF terms each month.

2. Take a mortgage in CHF. By doing this, the house price is locked in at today's exchange rate, meaning that I'll forever be paying off a mortgage of around CHF1m. In CHF terms, my payments will remain the same each month, but there's always the risk that exchange rate fluctuations will affect the underlying value of the house.

When most people talk about exchange rate risk, I think they're talking about the first scenario -- the risk that they take on a monthly mortgage payment they can afford today in CHF terms, but which becomes unaffordable as the exchange rates fluctuate.

Scenario 2 only causes problems when it's time to sell the house.
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Old 13.01.2011, 10:26
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Re: CHF mortgage on EUR property

I have a French property with a € mortgage and have asked Credit Suisse and ZKB both said they would not re mortgage in € or CHF.
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Old 13.01.2011, 10:39
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Re: CHF mortgage on EUR property

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I guess it's a question of which risk you want to be exposed to.

Suppose I buy a house today for EUR800k, but earn a salary in Swiss francs. I have two choices:

1. Take a mortgage in EUR. By doing this, I expose myself to the risk that my mortgage payments can increase (or decrease) in CHF terms each month.

2. Take a mortgage in CHF. By doing this, the house price is locked in at today's exchange rate, meaning that I'll forever be paying off a mortgage of around CHF1m. In CHF terms, my payments will remain the same each month, but there's always the risk that exchange rate fluctuations will affect the underlying value of the house.

When most people talk about exchange rate risk, I think they're talking about the first scenario -- the risk that they take on a monthly mortgage payment they can afford today in CHF terms, but which becomes unaffordable as the exchange rates fluctuate.

Scenario 2 only causes problems when it's time to sell the house.
Well it actually has to do with your cashflows now, innit?
If you have a steday, predictable stream of CHF flows, then by all means go with a CHF based mortgage.
If your flows are euro based - well then you'd better be prepared to live with the volatility, which can work for or *against* you.

Living in Ticino I have seen my share of desperate italian frontalieri that have had to face this issue over the past 2 years.

Or better, ask the East European homeowners how they've been faring during this whole period

Paul
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Old 13.01.2011, 10:56
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Re: CHF mortgage on EUR property

our CHF fixed rate mortgage for a house in France is from BNP Paribas. But we got several offers, most banks around the border offer that kind of deals. Swiss banks don't though, we asked all the big ones in Basel.
Cashflow is in CHF of course.

Last edited by ullainga; 13.01.2011 at 13:13. Reason: mixed up currencies
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Old 13.01.2011, 12:03
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Re: CHF mortgage on EUR property

try credit agricole in france.. they certainly do it as they did for me..

my opinion is that the franc is overly strong at the minute v the euro.. therefore if you are paid in chf, i would certainly take a mortgage in chf as you should make when the euro becomes stronger...
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Old 13.01.2011, 12:54
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Re: CHF mortgage on EUR property

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my opinion is that the franc is overly strong at the minute v the euro.. therefore if you are paid in chf, i would certainly take a mortgage in chf as you should make when the euro becomes stronger...
This is our view as well -- since cashflow is in CHF, I'd like the mortgage to be in CHF as well. Like you, I think that the franc is about as strong as it's going to get, so any movement will be in my favour.
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Old 13.01.2011, 13:27
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Re: CHF mortgage on EUR property

We have a CHF mortgage on a French property through Credit Agricole in Lausanne (Mr. Rudolf Platel), who I would recommend if you speak French. The conversion from EUR to CHF was done at the time of the purchase.
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Old 13.01.2011, 13:39
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Re: CHF mortgage on EUR property

From the research I have done previously into this type of thing (actually looking at a UK property financed in CHF):
1. typically it is easier to find a bank located in the same country as the property who will lend in a 'foreign' currency, although for this often there are minimum loan levels ie UK bank will not lend e.g. 200k CHF, would want minimum 750k CHF for example

2. you are likely to pay a higher interest rate doing this than you would for a CHF mortgage on a swiss property financed via a swiss bank

3. beware the payment mechanism - in the UK many 'foreign currency' mortgages were setup for people to use as FX/interest rate speculation and the primary purpose was to act as an interest rate swap (ie mortgage using a currency with a lower interest rate than GBP so that your monthly payments are cheaper) - as such they were not really setup for people with cashflows already in the foreign currency, and even though the debt was in the foreign currency many such deals expected monthly payments in GBP from which they would buy the foreign currency at that point - such a mechansim is pointless for those who already earn in the foreign currency
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Old 13.01.2011, 16:08
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Re: CHF mortgage on EUR property

if you already have a swiss property, you might be able to extend the mortgage on that and effectivelly pay cash for the French property. I know someone who did this, thed had enough equity on the Swiss property to fund it.
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Old 13.01.2011, 16:39
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Re: CHF mortgage on EUR property

Try Credit Agricole Financement (Suisse)SA, set up especially to deal with CHF earners wanting to buy in near-by France. They have a branch on the Rond-point de Plainpalais and another just past Placette, towards the station. We transfered our mortgage to them a couple of years ago (fixed in CHF at the time of purchase), interest rates have just gone up to 2%.
A
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Old 07.06.2012, 11:08
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Re: CHF mortgage on EUR property

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Crikey, that's an old thread you've revived. But as you have I'd just add that many French banks are, or at least were, happy to have a Swiss Franc mortgage on a property purchased in Euros. Ours is with CIAL (CIC). Was actually purchased in French francs, which dates it, but I don't imagine it's much different now.

Last edited by Ace1; 29.05.2014 at 22:47.
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Old 07.06.2012, 12:55
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Re: CHF mortgage on EUR property

The best route for you is to consult an international mortgage broker in France. When I wanted to obtain a mortgage in France as a UK resident I thought it would be best for me to complete it in pounds sterling. It turned out I was wrong. Through the broker I was able to get a 3.5% rate on my mortgage. Either way, your best bet is to consult an international mortgage broker.

Hope I can be of some assistance.
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Old 07.06.2012, 18:34
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Re: CHF mortgage on EUR property

Some Swiss banks will ... but the property has to be within a defined distance of the border... (think it was 10k when I asked a long time ago)
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Old 07.06.2012, 22:14
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Re: CHF mortgage on EUR property

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try credit agricole in france.. they certainly do it as they did for me..

my opinion is that the franc is overly strong at the minute v the euro.. therefore if you are paid in chf, i would certainly take a mortgage in chf as you should make when the euro becomes stronger...
If the Euro becomes stronger!!!!!
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Old 09.06.2012, 13:46
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Re: CHF mortgage on EUR property

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Some Swiss banks will ... but the property has to be within a defined distance of the border... (think it was 10k when I asked a long time ago)
I own a rental property in Germany (less than 1 km from the Swiss border) which was financed through UBS. Last year, I received a letter saying that UBS is no longer financing property in Germany and that my mortgage will be terminated (and due in full) when the contract expires (I had a 4-year fixed mortgage, which I had signed about 3 months before the crash in mid-2008). I have been paying 4.6% - and kicking myself in the arse - since then.

Anyhow, the mortgage terminates next month - and I am now in the process of re-financing the property through a German bank. As of next month, I'll have a 5-year fixed Euro mortgage for 2.55%...
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