Multicurrency Mortgage A mortgage in Multicurrency Mortgage currency offers an opportunity that loans in euros do not provide, in effect, because it allows you to take advantage of the low-interest rates that can be charged in other countries where credits are granted in different currencies. However, the mortgage in yen (or in any other currency) carries an additional risk that does not exist when we contract it in euros.
That risk is that we have to pay the credit in yen when in Spain and other European countries we do not earn in that currency but euros. The trouble is that the relationship between the Euro and the yen, what we call the exchange rate, can fluctuate. It can do so in two directions and with two consequences: if the Euro strengthens against the yen, we will pay fewer euros for our mortgage every month, but if the Euro weakens against the wish, we will pay more.
The multi-currency mortgage is perhaps one of the mortgage loans least known for its particularity. Find out what it consists of, how to claim, and what the Bank of Spain says about it.
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What Is A Multicurrency Mortgage
A multi-currency mortgage is a type of mortgage that allows you to pay the loan installments in a currency country. You can pay the mortgage in any other currency such as the pound, the yen, or the dollar. Some of its features are:
- They are variable mortgages.
- The interest rate is associated with a reference index other than Euribor, usually Libor (London exchange rate).
- It is paid in a currency other than the Euro.
- The mortgage depends on the fluctuation of the currency.
Why Can A Multicurrency Mortgage Be Abusive
Signing a mortgage loan in another currency implies the need to have advance knowledge of financial products to avoid exposing yourself to serious debt problems. However, the multi-currency mortgage can be consider abusive for these reasons:
- Not enough information has been receive about what was contract
- The value of the currency has increased, and that has increased the debt
- The consumer profile is not qualified to know the risks
If the mortgage loan was contracted after June 2019, the client has the right to convert it to :
- Conversion of the multi-currency mortgage to euros:
- The currency of the country you reside mortgage contract or in which you reside when the change request
- The currency you receive most of the income assets with the mortgage.
How To Claim A Multicurrency Mortgage
As with other types of mortgages, such as the mix mortgage or the fixed mortgage, if the risk of any clause of the loan has not been adequately explain, it must be claim they return what they have overcharge. This is reflect very well with the expenses mortgage in the rest of the loans. The ways to demand a refund are:
Contact The Corresponding Bank
You can negotiate with the entity request mortgage be convert to euros, that the Euribor as a reference, and the return of the amounts paid in excess. If the bank offers an agreement, it is essential to consult before signing any document.
Filing A Lawsuit In Provincial Court
If the bank’s answer is no or perhaps not all beneficial, you should go to court to denounce the abusive clauses. It is a long process and should always be complete through a lawyer.
Recommendations before taking out a multi-currency mortgage
Under the advice of the Bank of Spain, those interest in subscribing to a multi-currency mortgage should know:
- The amount of the debt can vary upwards or downwards depending on the currency that has been contract.
- The installments will change according to the interest rate and the exchange rate that has been contract, which will mean changes in the payment every month.
- Changing currency will have a cost even if it is done on the agree dates.
- The currency in which you owe the debt is different from the one you have when you receive your income.
- If the currency you have subscribe to the mortgage rises concerning the Euro, those installments in euros will also increase. You have to assess the risk.
Protection Of The Mortgage Law For The Multi-Currency Mortgage
The abuse situation create with multi-currency mortgages meant that a large number of people were affect. The mortgage law established a series of measures in force for mortgage loans after June 2019, when the mortgage law came into force.
- The bank must include in the pre-contractual information how much more expensive the mortgage can be if the currency exchange rate rises.
- The bank must periodically report the increase in debt that causes the rise in the value of the foreign currency.
- The consumer has the right to change it to euros during the entire term of the mortgage.