Renovation Loan in Hungary

my girlfriend and i are buying a country house in hungary in cash. this will just about tap us out financially. the home will need a fair amount of renovation.

we are considering an equity loan on the property to pay for the renovations after it is purchased.

i get paid a pension in Dollars, she gets paid in Forints.

From what i am recently learning, even a foreign currency based loan (CHF for example) in Hungary is required to be payed in Forints. is this true?

I am leery of a foreign currency loan as it is, let alone two exchange rates.

the other option i have is to do a personal loan in dollars from a bank or credit union, but the rates are at 10.5 percent now and the terms are possibly too short.

what would be the safest way to do this renovation loan?

Unfortunately there is no perfect way of financing in Hungary at the moment.

HUF mortgages are very expensive and not popular with either locals or foreigners. It's very likely that Hungary will be part of the Eurozone by 2012/2013, so all HUF mortgages will become EUR at that stage in any case.

EUR mortgages are the most common and if you can deal with the currency risk, then they offer cheaper interest rates. Unfortunately the EUR/HUF rate is very volatile and it's impossible to predict which way it will go in the future.

CHF mortgages are no longer popular, but USD-based loans might be appropriate for you, depending on your personal circumstances. (For the most part, foreign-currency loans are paid in the foreign currency and not in HUF).

If you haven't signed contracts just yet, you could try to apply for a purchase mortgage instead of an equity-release product. Some banks only offer purchase mortgages at the moment, so it might be best not to narrow your options just yet.

ok thanks for the information. it sounds like my girlfriend was giving me incorrect information about loans in general having to be paid in HUF. the particular bank we talked with did confirm that the loan would be swiss franc based but would have to be paid in forints from a forint account. hopefully this is not the case with all banks.

i wouldn't mind a euro based loan as there seems to be a lot less volatility between the dollar and the euro. what banks offer euro loans and what are the going rates. rates seem to be all over the place from 5 to 12 percent.

as far as i know there is no such thing as a dollar mortgage for hungarian property, let alone renovation loan. ???

is there a dollar based personal loan at 7 or 8 percent anywhere with 10 or 15 year terms? i think this would be the safest.

our offer was a cash deal, so i don't want to jeopardize the closing. we got a good price.

In some cases, foreign currency loans are paid in HUF and sometimes not. It depends on the bank.

Yes, it's possible to get USD mortgages in Hungary.

Interest rates and terms change on a weekly basis. Your best bet might be to get a broker to operate on your behalf. With your girlfriend's help, you could try www.benks.hu.