Refinancing Your Mortgage Not Necessary

Refinancing Your Mortgage Not Necessary

Now there is a simpler way to repay your mortgage in record time.

 

By Bernard Haasbroek

www.MyInfoRiches.com

 

How to Refinance UK debt into a Foreign Currency?  Since writing an article on Foreign Currency Mortgages, I have been inundated with questions on how to actually go about doing this.  These techniques are discussed in detail in Don James’ latest book, The Millionaire Mortgage Secrets handbook but I will briefly explain just on of the ingenious Foreign Currency Mortgage techniques. 

 

So how do you switch your mortgage from a UK bank to a Japanese or other foreign currency lender?  One answer could simply be that you don’t.

How to do it?

Introducing Simulated Currency Mortgages.  Let’s assume that we have £5’000 sitting in your savings account, not doing much and certainly not earning near enough in interest.  Taking our earlier example of a £100’000 mortgage, we can invest the £5’000 as “risk capital” with certain fund managers who will move this money all over the place between the various currencies with the objective of reducing your mortgage debt by 5% per year.  Fund managers can actually leverage this type of investment by up to 200 times the amount of debt, subject to our financial status.  So our £5’000 investment could effectively be used for a mortgage debt of £1’000’000.

 

If this works, our £100’000 mortgage will be completely paid off in approximately 14 years, without needing to make any overpayments from our pockets!..  Reports however indicate that this is often achieved in a quicker timeframe, but of course no one can guarantee any results.  It is very important that you seek advice from a qualified financial professional.  This is however not easy because most IFA’s know very little about the integrities of Foreign Currency Mortgages and will advise you against such tactics, simply because they do not fully understand it themselves.

 

Advantages of this strategy

• There is no need to physically refinance your mortgage so you can stay with the same lender thereby avoiding early redemption penalties.
• Any fees to fund managers are paid only on profits. If you do not make a profit then there are no fees to pay.
• There is no tax on profits for most investors
• Risk is capped to the value of the investment, i.e. £5’000, in our example.

 

But there are some disadvantages too

• You need some cash to get going (generally 5% of the debt). This cash, called margin funds, go into a trading account and is no longer available to you.
• You could loose some or all of this investment if the exchange rates turns against you.  That is why it is called risk capital so don’t do this if you can’t afford to lose this capital.

 

Can you do it yourselves?
Yes, you can – but the question should really be, do you really want to?  Effectively all you would need is access to currency exchange rates on the Internet and a self administered fund account.  However, the DIY option is cumbersome, much riskier and not recommended if you want to sleep peacefully at night.

 

The key to success is to switch the debt into the right (or weakening) currencies at the right time, and you therefore need to constantly have your pulse on all the currency markets.  Fund traders are trained professionals and they do nothing but trade in currency so this is a much wiser option.  Ideally, you should use fund managers who only get paid on performance, i.e. if you make you a profit.  Commissions may seem high but it is well worth it for the reasons stated above.

 

Is this route for you?
It really depends on your risk tolerance level.  In my opinion the pro’s far outweigh the con’s.  You do however need the additional investment and a good understanding of the concept and its risks.  It is probably best to start small and increase your capital exposure over time.  This can very easily be done, unlike the normal refinancing route.

To Summarise

• You keep your existing loans in place, no need to refinance thereby avoiding early redemption penalties.
• You open an account with an FSA regulated broker specialising in Foreign Currency Mortgages.
• You put some money into this account, typically 5% of the nominal amount traded.
• Your broker trades on your behalf.

 

Any profits accrued as a result of currency movements and interest rate differentials are credited to your account.  You may of course also refinance your debt at any stage, thereby applying two of these mortgage busting techniques at the same time.

 

This is about as much as I can cover here.  For more information of this and other mortgage busting techniques please visit www.millionaire-mortgage-secrets.com. 

Article Source: http://www.theukarticledirectory.co.uk