GBP Case Study

In July 2004 John was introduced to the international currency mortgage by a friend who had previously used and benefited from the product. At that time John was living in Hong Kong and had one property in the UK which was valued at GBP 600,000 and was previously his principle residence. He had an outstanding mortgage of GBP 340,000 with a UK lender and his monthly payments were GBP 1,350.

He had recently decided to rent out the property and had managed to secure a tenant paying him GBP1,400 per month before management fees and so John was now happy that his mortgage payments were now being covered by his tenant.

His next objective was to buy a holiday home in Thailand but didn’t have enough spare cash to do so as it is not possible to borrow against Thai property. He was advised that he could borrow up to 75% of the value of his UK property which meant that he could mortgage his UK property up to GBP 450,000 and release equity of GBP 90,000 which along with his savings would be enough to buy his villa in Thailand.

The downside of borrowing more money was that his monthly payment after the re-mortgage would now be more than his rental income. After some currency analysis John decided to borrow in JPY at 198.8 to the pound so he now had a new mortgage of JPY 89,460,000 which was charged at an interest rate of 1.32% which meant that his new mortgage payment was GBP 495 per month offering a huge saving over and above what his tenants were paying him and he now owned the villa in Thailand. Over the course of the next 24 months John benefited and the JPY weakened significantly to the point of 224 in September 2006.

John switched to CHF at that point and reduced his original mortgage to GBP 399,500 a reduction in debt of GBP 50,500 or 12%! As well as that during the previous 24 months his outgoings had been reduced and he had managed to save over GBP 25,000 which was the difference between what he had been receiving in rent and what the actual mortgage was costing him.

John then did an equity release from his main UK property which was now valued at GBP 700,000 so he was able to take out another GBP 125,500 which he then used to buy three small investment properties in the UK without using any of his savings. The new mortgage on his former residence is now GBP 525,000 and it is in CHF charged at 3.5% costing him GBP 1,531 per month but he has reviewed the rent on the property and now receives GBP 1,500 per month from his tenants. The three investment properties are all rented out and bring in combined rental of GBP 1,600 per month. The three mortgages that he has on those properties are also in CHF and cost him GBP 1,180 per month so he still has positive cash flow.

John has managed to increase the value of his property portfolio from GBP 600,000 to GBP 1,400,000 over the last 3 years and he hasn’t spent any of his own money in doing so. It is his intention to continue over the next 5 years to buy more investment properties when he has sufficient equity within the portfolio to do so.