US Dollar Mortgage

Overview

The United States Dollar ($USD) is the currency unit of The United States of America. It is the World's foremost reserve currency and is also used as the standard unit of currency in international markets for commodities such as Gold and Petroleum. Besides the United States, there are a number of countries that have adopted the US Dollar as their official currency. Panama is one of them. There are other countries that have linked their currencies with the US Dollar at a fixed exchange rate as in the case of Bermuda.

The important role played by the US currency carries with it risk and benefit, thus the value of the US Dollar can be affected by various political and financial happenings around the Globe. The very recent financial crisis shows this when its value grew stronger at the beginning of such crisis - the US Dollar being seen as safe-haven,at the time.

Mortgage

A US Dollar denominated mortgage can be arranged when the property is located in a country whose currency is the US Dollar or when the borrower earns in US Dollars.

The current US Prime Rate used as a base for mortgage lending is 3.25%. Thereafter a variable margin, typical 0.5 - 2% is added to such rate to give the paying mortgage rate. Such margins may vary with the country  where the property is located and its loan to value ratio

Rates can be variable, tracker or fixed and the maximum ratio of loan to value that may be obtainable from lenders is 80%. Conditions may apply.  

The granting of such mortgage may however be limited to a minimum amount, typically 160,000USD.

Capital and Interest Only mortgages are available with a US Dollar denominated mortgage. In some cases an all Interest Only mortgage may be 0.2% higher than a Capital Repayment equivalent

Switching

IMPORTANT:

In AUSTRALIA, CANADA, DUBAI, FRANCE, HONG KONG, NEW ZEALAND, PORTUGAL, SINGAPORE, SPAIN, UNITED KINGDOM (also) and UNITED STATES, The Mortgage Explorer Ltd can offer a switching  facility where a dual currency loan is granted. There are 2 free currency switches, offered per calendar year and a fee of USD150 per switch applies thereafter.

We consider such facility to be of utmost importance especially at times of great uncertainty in the currency markets. Also when/if a reduction in loan amount has been achieved through the change in exchange rate between  two currencies e.g. the currency where the property is located and the US Dollar. 

Please note:

Foreign exchange movements can be sudden and substantial and you must be able to tolerate a sizeable increase in your loan through such movements. At no stage should you expose yourself to high risks of foreign currency borrowings if you are not able to afford the potential losses that could result from adverse currency movements and the higher interest rate servicing costs that would be required of you due to your having a larger loan. Denominating debt in foreign currencies may not be suitable for you. If you have any doubts as to your suitability for borrowing in foreign currencies or your understanding of the risk involved, you should consult your financial adviser. Changes in the exchange rate may increase the equivalent of your debt, in whatever currency you deem important to you e.g. main income's. Your lender will not tolerate too great an increase in your loan as a result of currency losses and may opt to convert the loan back into the lender's specified base currency at a predetermined level. This may result in a permanent increase in your loan which is not fully compensated for by any other benefits. In this event, you could be left paying interest rates on a larger amount of loan than that you originally borrowed.