Overseas investors warned to watch exchange rate

Investors buying property overseas should take notice of recent currency exchange rate swings in the United States and Turkey, Assetz has warned.

In the United States the value of the US dollar has fallen from $1.75 in April to $1.88 to £1 Sterling, which equates to about a 7% loss of capital for British investors who bought there for cash or re-mortgaged their UK home in order to buy last year. However, those who took out an American mortgage will see the Sterling value of their debt falling by the same amount, reducing their loss to just 7% of their deposit.

Similarly, over the last month the value of Turkish Lira has fallen from approximately 236,000 to almost 300,000 Lira to £1 sterling. This severe currency shift means investors who purchased property up to March 2006 with Turkish Lira could now find themselves with a capital loss in the region of 20%. Mortgages are not currently available in Turkey but are expected to be announced imminently.

Stuart Law, managing director of Assetz, commented: “Those looking to invest in the US and Turkey can learn a valuable lesson in the benefit of using foreign mortgages in the country where they are buying. If both the property and its mortgage are priced in the same currency, this will minimise the risk to the investor from capital loss.”

For currency news and links go to www.OverseasCurrency.com