International lending for real estate. - Posted by Leon Wilson

Posted by Eric C on October 24, 2000 at 13:22:52:

Hi Leon -

I think your scenario is optomistic as far as the Aussie Dollar goes. How far it will go and in what direction, who can say?

You might find a U.S. bank willing to do this depending upon your borrowing strength (or that of your employer). Banks have been known to do these as a favor to large multinationals for their executives.

But, don’t expect much. These loans, when they are available at all, do not come cheap. Personal guarantees, floating interest rates, low LTV’s, large downpayments, and possibly some form of compensating balance would be the most probable mix. Not too encouraging for investors.

The primary reason for the lack of interest in Aussie investment opportunities is simple. There are far better opportunities elsewhere which don’t carry nearly as much risk to the lender (or anyone else either).

Now, having said all that, here’s something you can try. Get the local branch of an international bank, Chase, Credit Suisse, etc. to make you a loan in Aussie Dollars, but one that is “booked” in US funds (or Swiss francs, German Marks, whatever).

This is no easy sale either, but is far more probable than your request.

I haven’t done any of these lately, but I have purchased property using loans similar to what I described to you.

Example: I purchased a condo property in Mexico some years back and negotiated more favorable conditions (fully amortized)than most. (At the time, there was almost NO financing of properties period.) My first payment was $450 US, and as the peso fell in value, the amount of US funds it took to repay the loan also fell. The last payment was $ 45 US.

Good luck,

Eric C

PS - You might also try ABN AMRO. I used to use Royal Trust (Canada), but no longer.Check with the British banks that have a presence (and local ties) to your area and to Hong Kong.

Also note, if you have no source to repay this loan with anything OTHER than Aussie Dollars (translation - you can’t take advantage of the spread)this will not be attractive to you.

International lending for real estate. - Posted by Leon Wilson

Posted by Leon Wilson on October 23, 2000 at 04:21:54:

I am considering buying some real estate here (in Sydney Australia) where a typical property will set you back $US200K+ ($AUS390K+).

At the moment the Australian dollar is extremely weak (or rather the US dollar is very strong), and in the sentiments of a number of financial periodicals the Australian dollar is considered to be an extremely good buy for US traders. Hence the market is expecting an adjustment (from a low last week of US51.8cents per $AUS1) to a value 10-20% greater than at present.

Rather than obtain a loan from a local source (standard variable home loan rates are 8.0%) I would like to know if any US lenders support US based loans for properties purchased overseas (ie Australia). There is a potentially HUGE market here for such lenders, especially with the Australian dollar so low . . .
Leon Wilson.

Re: International lending for real estate. - Posted by Eric C

Posted by Eric C on October 31, 2000 at 15:43:53:

Hi Leon -

Something else you could try is to get a loan using Japanese yen.

Currently the interest rate on yen is very low – around 1.5 percent. This would give you a very attractive interest rate and some stability, but there might also be some currency risk.


Eric C