You still have a mortgage in a foreign currency in Austria and want to know what the repayment actually looks like today. A familiar monthly outflow from the euro account does not answer this question completely. What matters are the outstanding debt in the contract currency, the current conversion reference, the contractual repayment schedule and, where applicable, a separate repayment vehicle. This article helps with taking stock. It does not recommend either a new foreign-currency financing or a specific conversion timing.
Do not reduce four risks to a single exchange-rate question
The Austrian FMA names for consumers in particular interest-rate, exchange-rate and repayment-vehicle risk as well as unplanned costs. [RISIKO] A more favourable development of a single variable does not automatically eliminate the other uncertainties. Therefore, as preparation it is not sufficient only to compare today’s rate with the rate at the time of loan origination.
Our practical recommendation is to lay current loan information, the original contract, later amendments and all documents relating to associated savings or insurance products side by side. Use the same valuation date for the comparison, insofar as corresponding information is available. An old portfolio balance and a new loan amount must not be implicitly offset as if they were simultaneously available values.
Read the remaining debt in the correct unit
First note which sum in which currency is actually outstanding. Add the euro equivalent with a reproducible direction of conversion and date. An exchange rate can be given as foreign currency per euro or as euros per unit of foreign currency; for your calculation it must be clear which representation you are using.
A purely hypothetical example keeps the debt unchanged at 100000 Swiss francs. Assuming 1 euro equals 1,10 francs, the division yields approximately 90909,09 euros. Assuming instead 1 euro equals 0,90 francs, it is approximately 111111,11 euros. This assumed exchange-rate change alone increases the calculated euro equivalent by around 20202,02 euros. Interest, fees, bid-offer spreads and actual payments are expressly not included in this simplified comparison.
The two rates are freely chosen calculation assumptions and are not current rates or a forecast. The example only shows why an unchanged foreign-currency debt can look different from the perspective of your euro budget. For an actual payoff you need the specific calculation from the lending institution with its decisive conditions.
Link the monthly payment with the end of the term
Read in the repayment schedule which ongoing payment actually reduces the debt. If a separate investment or insurance product is intended for the later repayment, consider this separately: current value, available payout, date, costs and remaining uncertainty.
An originally expected payout is not already available coverage. Ask to be told which amount is actually secured at which time and where only an assumption still stands. Do not automatically call a calculated shortfall a fixed final loss; at the same time an hoped-for future value must not make it disappear without evidence.
If you already have an overview of a combined loan and savings contract, now explicitly add the currencies and rates of both sides. Otherwise a nominal juxtaposition of different currency units leads to an apparent coverage that says nothing mathematically.
Compare courses of action on the same basis
For an advisory meeting describe the occasion for your decision: end of term, changed income, new housing plans or a concrete offer to convert. Ask for the further development of the position and a possible change to be presented with comparable assumptions. Which payments arise now, which later and which risks actually change?
Distinguish a provisional example from a binding offer. The article promises neither a free conversion nor the unlimited availability of a new loan. Contractual redemption conditions, possible incidental costs and consequences for a repayment vehicle must also be clarified on the basis of your documents. A single lower new monthly instalment is not a complete comparison of the remaining financing.
Choose a deliberate next step
Do not only set a hoped-for exchange-rate moment, but a date on which information and the decision will be re-examined. Which document is missing? Who will prepare the reliable payoff calculation? Which financial means can you actually mobilise at which time? This turns an indefinite hope into a manageable financing situation.
In case of considerable uncertainty use appropriate independent advice in addition to the discussion with the bank. The benefit of your preparation lies in the shared valuation date and in clearly separated currencies, payment types and assumptions. Future exchange-rate developments cannot be reliably predicted from this. Your decision should therefore match the actually identifiable possibilities and risks, rather than treating a new exchange-rate bet as a secure repayment plan.