Hello, With interests rates going thru the sky over here in the uk (London me) @ the moment being on 5.75 and more than likely gonna raise probadly in september and top out this year at 6.00%. I was wondering is it possible to borrow money abroad i.e. china i think it is 0.5%. If not china any other country where rates are cheaper. And if so how do you go about doing it? With rates going so high the margin to make money on buy to let is near impossible and i dont want to subsidise my tenants. i.e. tenants were invented so they pay the mortgage not the blinking owner (me)
Yeah but then you have a FX exposure. Look into something called a carry trade, that's essentially what you are describing.
I have a million US$ borrowed in China its nearer 7%, but 0.5% let me know I am not doing it right. In Australia I have about the same borrowed and it 7.75$ possible going up a.25% in the morning. The UK rate sounds cheap maybe I should return home to borrow some money, but the last time borrowed in the UK it was about 16% heading for disaster.
I have just had a look at the "carry trade" on google search but that looks more "tradeing" than "borrowing" Just like when you want a bank loan in the uk, you go into the bank and they say yes or no @ rate of 7% for instance. Ideally i want to do the same but go to a country where rates are much lower and borrow money from them
Yeah but if you borrow money in a foreign country they give it to you in their currency, they won't lend you sterling at their interest rates. So I assume you need the money for something in the UK, so you need to change it to sterling. Once you change it you have a FX exposure because on repayment of the loan the rate might have moved a lot against you and it would take more sterling to buy back the local currency. Of course it could work the other way and the rate could go in your favour. So, it's not as simple as borrowing at 0.5% because the currency moves could be massive (and often are)
