Foreign currency mortgages are rightly described as being for risk-friendly speculators. As has already been mentioned, foreign exchange markets can be extremely volatile at times. Just as the value of Sterling can go up against the foreign currency of your choice, so too can it go down. And down. And down.

If the worst happens and Sterling crashes against the currency in which your mortgage has been taken, or the loan currency has a surge of strength, you can find your monthly repayments rising rapidly, without any real limit to the exposure. If Sterling fell by 10 percent on a £150,000 loan borrowed in Euros at an interest rate of 5.5 percent, for instance, you could end up paying as much as £100 extra each month, due to the fact that the Sterling value of your loan has risen by ten percent.

The more that you borrow, the greater your exposure to the risk and the more you could end up having to pay if the currency swings go against your favour. Given the relative strength of Sterling at the moment, it would seem that this risk is a fairly real one.

Most lenders will forward you an absolute maximum of 75 percent of the property value for a foreign currency mortgage. While this protects them against fairly sizeable currency swings and ensures that the repossession value of the property in the loan currency will almost certainly be sufficient to repay the debt, it doesn't really give you any protection.

Many foreign banks shy away from this type of lending, as the thought of going through the English legal system to repossess he house or recover their funds is enough to deter many of them from offering this type of service. They are also aware that many borrowers may not be fully aware of the full effect that swings in the exchange rate can have.

At the end of the day, there is the possibility to enjoy success on the foreign exchange and lower monthly repayments as a result of a reduced interest rate. But the bottom line is, only consider taking out a foreign currency mortgage if you are able and prepared to tolerate sizeable increases in the size of your repayment and definitely get specialist advice before going ahead with any transaction.

Finally, it should be remembered that the prevailing rate of interest in a country does not always reflect the rate at which mortgage lenders will offer their home loans. For instance, although the rate of interest maintained by the European Central Bank has been consistently lower than that maintained by the Bank of England, the gap between the lending rates in the UK and across the Euro zone has not been so wide, thanks largely to the high level of competition in the UK mortgage market.