Multi-currency magic?

By HELEN MONKS
Updated: 19:00 EST, 21 February 2002

LET professionals manage your mortgage and pay it off in half the time. It is possible if you take out a homeloan denominated in a spread of foreign currencies and have the debt managed as a portfolio, says The ECU Group.

It says more home owners should consider multi-currency mortgages, though they need to accept the extra risk involved. They must also be earning more than £75,000 and be looking for a minimum loan of about £250,000.

The sterling equivalent of a foreign currency loan will increase or decrease according to the exchange rate of that currency against sterling. If the chosen currency weakens against the pound, then the sterling value of the loan will be reduced. But if the currency strengthens against the pound, the sterling equivalent will increase.

ECU Group's track record looks convincing, but as with your investments, past performance is not a guarantee an indication of future returns.

If you had taken out a £100,000 mortgage through the ECU group in 1988, when the company started managing debt, by the end of last year you would have made enough to pay off your mortgage and pocket £35,000, it says.

Interest on the ECU mortgage is charged at the inter-bank rate applicable to the chosen currencies, plus the bank's margin, typically between 1.25% and 2%. Even with the extra charges, ECU Group customers over the last 14 years have found the debt managers have more than earned their keep.

The loan is split between a number of currencies to shelter your debt from the impact of events such as those of September 11. It is switched around to maximise the opportunities to reduce your debt, much in the way a fund manager will buy and sell different stocks to maximise your investment return.

Unlike mortgages denominated in euros, which require the borrower to be paid in sterling if they want to buy a property in this country, the multi-currency borrower can be paid in sterling and use their loan for UK properties.

ECU Group chief executive Michael Petley says: “This is not a mass market product. It is not just whether individuals meet the income and minimum loan criteria, but also their temperament. If you are of a nervous disposition and are likely to be constantly checking currency markets, then this will not be right for you.”

There are extra charges on the loan in addition to interest. Depending on loan size, charges range from 1% for loans of between £150,000 to £250,000 down to 0.25% for loans over £10,000,001, there is also a 'performance charge' of 15% off your bottom line annual profit after other charges have been deducted. This charge can be added to the loan.

While ECU does not impose set-up charges, the actual costs of setting up a loan will vary between the banks distributing the mortgages. These are private banks including HSBC's private banking arm and ECU's own private banking division.

• For more information go to www.ecugroup.com