The Finance Owl

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Best Time For British Expats to Pay Off Bank Loans

Posted by theaccountant September - 25 - 2009 - Friday

It looks like the various comments coming out of the Bank of England and the UK Government have caused a further small tumble in the value of sterling. This has resulted in some stimulus to the UK export market, but has also resulted in the potential for expats to pay off their UK bank loans early.

Many expats work abroad in countries which have Euro or US Dollar based currencies. The UK Sterling has devalued against both of these currencies and this therefore provides expats with some of the best opportunities to repay any UK Sterling based loans earlier than expected. It is worth noting also though that many expats work in the Middle East or the Carribean which, in many cases, have currencies which are pegged against the US Dollar.

Many expats who work overseas still have bank loans based in the UK, yet earn most of their income in US Dollar or Euro based currencies.  This results in the expat suffering from exchange rate risk, which as with any risk may result in unexpected exchange gains or losses. At present there are many British expats who are making unexpected gains as a result of Sterling’s devaluation, however several years ago many of those same British expats were suffering as Sterling appeared to grow from strength to strength.

For now though many British expats may be taking the opportunity to pay off sterling based loans in UK banks, such as Abbey (Santander) Bank or Barclays Bank. Some British expats also think that it may be the best time to pay off mortgages as well as sterling based bank loans. It is questionnable whether this is the best time or if holding on a bit longer may provide better exchange rates. Professional independent advice should always obviously be sought, but the present exchange rate certainly seems like one of the best rates, for an expat, when compared to the history of the last few years.

What do you think? Is this as good as it gets?

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