1.5% Variable Mortgages

You have a debt of £100,000 on your investment property at a rate of 6%. You borrow 20,000,000 Yen at £1 to 200 Yen to clear the mortgage at 1.5% borrowing rate.You service the Yen Mortgage by converting the rent received in pounds in to Yen. This means your mortgage payments reduces from £6,000 per year to 300,000 Yen which equates to £1,500 at the current rate.

So in effect you reduce your mortgage by 75% or £4,500 per £100,000 borrowed. Or in other words if your mortgage is £1,000 per month, you can reduce it to £250! Now that is quite remarkable. The only problem is the pound to the Yen fluctuates. So if the next day one pound could buy only 100 Yen then your debt would double and be £200,000.

You have to simply decide whether you want to introduce another form of risk within your property portfolio, namely foreign exchange risk.