CHF mortgage on French property

Real Estate
1

Hi we are about to sell a house in France, our mortgage is in chf. As the fx rate has changed significantly vs the one we were offered for the mortgage i.e. the chf has appreciated by 20% we are looking for ways to minimise the fx impact. I assume the most obvious would be to keep the money left after paying the mortgage in euros for as long as possible and hope the fx moves in our favour. Any other clever ideas would be appreciated.

Thanks in advance.

2

Good luck with that bet:

image
image1008Ă—458 33.8 KB

4 Likes
3

If that’s really your plan and you think you’ll be successful, it’s probably more efficient to do leveraged FX trading directly :slight_smile: (but don’t, you’re unlikely to win that bet)

4

As said I am looking for some tips, not saying this is the best approach.

5

I am not informed enough to know what other options I have so I hoped someone might have some good advice.

6

The standard way would be to avoid sunk cost fallacy.

Just do whatever you would be doing if you had CHF equivalent at current exchange rate. (You probably wouldn’t convert to EUR as an FX bet)

3 Likes
8

Thanks. We certainly had a low interest rate at the time with the French bank.

9

I’m not criticizing the approach. But just be aware you are taking a large FX bet.

1 Like
10

As others have pointed out, at this time, provided the sale goes through, the loss, if there is one, has already happened. Anything you would do now to hedge currency exposure would be a bet on the future.

My tip is to eat the loss if there is one, learn from the experience and move forward.

3 Likes
11

True, just trying to see if there are other options.

12

Open to other ideas but not sure there are any.

13

Maybe it is clearer to reframe the question to the post-sale situation: “I have €xxx,000 in cash, but I don’t spend Euros and need CHF. Should I sell them immediately, or gamble on the FX rate improving. EUR interest rate is positive, which I am taxed on so I will have a negative carry on this strategy so either need FX to move greatly to benefit, or both move in the right direction and quickly.”

14

Not sure what the goal is. But if you are trying to predict CHF / Euro moves then it would mostly be about luck and nothing else

I think you should simply make one decision which is „what should I do with Xxx Euros I am going to get"

  • keep in Euros
  • Invest in European bonds / money market products
  • Invest in equities or something else
  • Convert to CHF

What happened in past with mortgage etc should be irrelevant for this decision.

5 Likes