在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo
Quick question please guys.
Can you buy say $200k worth of either USD or EUD and the Bank store these for you??? On top of that, I would need to borrow $130k for this transaction, would the Bank lend me this if it's secured against a property etc?
2 reasons why I want to do this, firstly I think the AUD is overvalued and really want to buy one of those currencies when the RBA moves again and we head towards parity and secondly I want to buy a holiday house in Europe with the EUD as it's a dream of ours so need the roughly EUD$140k to accomplish this but need the above to do it.
Any suggestions, please get back to me. Thanks
If you want to buy a holiday house do it. If you want to play the forex markets, do that, just keep them separate transactions.
Well I'd buy the Forex currency first and then hopefully later when the AUD depreciates, either cash in the chips for a profit or go ahead and buy the European holiday house which is a dream for us.
The question I have is, will a Bank lend us $130k secured over our property to do this?
You've got bigger cojones than me backing the Euro V A$.
littletee said: ↑
Well I'd buy the Forex currency first and then hopefully later when the AUD depreciates, either cash in the chips for a profit or go ahead and buy the European holiday house which is a dream for us.Is this an australian propety? how much equity in it?
The question I have is, will a Bank lend us $130k secured over our property to do this?Click to expand...
If you borrow against an Oz property to buy a European one you are fully exposed to the exchange risk.
I think you are asking if you can borrow in Euros against the Euro property. I don't know but that way you'd have some hedging against a rising $A.
I think to begin with I just want to buy $200k of either the USD or EUD and borrow $130k of this to do so.
Will a Bank lend me $130k to buy one of the above and secured against my property which has about $300K of positive equity on it? Will they also allow me to store the money with them in that currency?
I second the big cojones call. I've actually been holding the the opposite position as a hedge against payments made to me in euros.
You need to separate the two things.
First if you have 300K equity in your property then all things being equal you should be able to draw down the $130K through a Line Of Credit.
Second if you want to purchase that amount of foreign currency there are a few ways to do it. But you need to decide if you want to actually purchase the foreign currency or just take a punt on that currency against the AUD.
If you actually want that currency then I think you need to open a foreign currency account in Aust, or open an account with a Us or Euro institution.
If you just want to take then punt then you can take a currency option or open an FX CFD position.
Thanks Ethann, great reply.
Can you open a foreign currency a/c with one of the big 4 banks and then borrow a line of credit to purchase that currency from them and store it in that a/c together with the $70k I will be chipping in?
It's been a while since I looked at opening a foreign currency account. I didn't end up opening the account but then my purposes were different than yours.
First you need to get the Line Of Credit in place. Once you have that in place then you can move the funds to wherever you like, along with your own $70K.
I'm pretty sure that all the Big 4 will offer foreign currency accounts. I know that HSBC definitely does.
However another option for you is to take a currency position using CFD's or a forward hedge. With CFD's for example you can take a $AUS 100K position for/against the Euro for around $4K. This means that you get any benefit/loss from the currency movements without having to front up the full amount. You might also want to consider taking to the guys at OzForex:
Just one word of warning about foreign exchange dealing. If you take out a CFD (or similar) then interest rates come into play - the difference between the interest rates in the two countries. For example if you sell the AUD against the Euro then you'll be paying the interest rate differential.
It can all get quite complex and I'm certainly no expert. A lot may depend on how far in the future you plan to purchase the property. Perhaps start by talking to the guys at OzForex and see what they recommend.
Awesome, thanks heaps for your feedback Ethann, I appreciate it
Will definately have to do more research.....
Sunfish said: ↑
You've got bigger cojones than me backing the Euro V A$.Click to expand...especially in something as illiquid as property.....