SGD Financing for Aussie Home

[Sternbear]

"Posted by: P.O.D.
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The A$ is at record levels and it is highly likely it will fall in value over coming months and years especially if interest rates are used to help curb inflation. This means the value of the mortgage in A$ will fall. "

Surely if interest rates are are used to curb inflation then AUD rates will remain high and this will support the currency.... both very good arguments for converting that mortgage to SGD

Inflation is a problem and getting worse in Singapore. Maintaining the S$ is a cost burden for the government even though it is cash rich.
 
I doubt Australia will be under such pressures to raise interest rates because the A$ is strong and if it does weaken it will make their economy stronger since they export many minerals. They are not so dependant on imports. They have plenty of oil and gas of NW shelf also, so a weaker A$ will make their exports more competetive.

 

Some facts:

Australia has a massive balance of payments deficit - in other words Australia is very dependent on exports

A weaker AUD makes no difference at all to the competitiveness of the majority of Australia's exports. All commodity prices are set in USD not AUD. So if AUD weakens it does not make Australian exports more competitive it simply means that when Australian exporters convert back to AUD the USD that they got paid for selling their exports they will get more AUD

[Ralph]

Ask the finance dude whether he personally has switched his AUD loan (in full or part) to SGD?

I switched when the SGD was stronger than the AUD. If the $ are close to parity and the cost of funds differential warrants the FX risk then maybe.

I ended up getting burnt over 200k...

[xxx]

But isn't the AUD is stronger than SGD at the moment so good to switch the AUD loan to SGD?

[Me too]

I'm also pondering this. I bought a Melbourne property last year. I have to get a mortgage for the remaining 90% when its completed.

To the original poster, just remember if you're going to rent it out, you won't be able to offset the income with your mortgage payments for income tax purposes if you take up a Singapore loan (That's what my financial consultant advised).

[to last post]

That's rubbish.  Get a new finacial advisor

[To to last post]

If it's rubbish that's very good news.

Any reference to an online source would be much appreciated.

[to last post]

i use SMATS in concourse. always done my tax and did my loans through them

[To to last post]

Thanks alot 

[Yen Yen]

Do it in Yen instead. Interest rate around 1.5%. I switched last yr when the yen strengthened against dollar. Remember this - i can wait and possibly ride out until it is a good time to repay the yen loan, but you guys paying 9% on the AUS$ can't wait out paying the interest. I pay so little interest, i don't even need to rent out the house in perth and use it as an escape from Singabore.
if a big earthquake in japan (hopefully not) happens, interest rate will rise but yen will weaken.

you can take FX xurrency options when you use Yen, although I dont as I dot want to pay for them.

[same boat]

i brought my melbourne property with a SGD loan when fx is at high of 1.3. Now that aud has depreciated so significantly, the loan to value of property ratio has increased beyond the bank's comfort level and i had to make partial repayment to the principal. As long as aud appreciates at the time you want to sell property, it is just paper loss for now. But need to ensure you have sufficient funds to ride this out.

Unless you are keeping track of the market, it might not be good idea to think of refinancing. Golden rule of investing: Must have ability to hold.... Melbourne property doing well, so valuation increasing as well... Good luck!

[rule of thumb]

Always borrow in the same currency where your house is located and esp. if you are getting rent from it.

1%-2% interest rates sounds very, very attractive against 8.5% but curreny exchange rates are moving in 5-20% in either direction every day/week.

I know of people who re-mortgate to SGD, HKD & JPY and now they are paying the price as they have been asked to top-up $20k+ in margin calls.

Its not only the local propery market that people will get burnt but others will have massive financial problems in their home countries. There is no escape.