Currency conversion of a loan is a change of the currency in which we took the loan into a different currency. As a result of the loan conversion, the currency in which the loan was previously repaid by the borrower is converted.
Do you want to know what currency conversion is actually? Are you wondering what is the conversion of a loan in francs or other currency? How much can your mortgage conversion cost in practice? We will try to bring this topic a little closer.
What is a loan conversion?
Let’s start by explaining the basic term: what is currency conversion of a loan? As the name suggests, currency conversion of the loan means that the currency in which the borrower has previously paid this debt will be replaced by another currency. Let’s try to illustrate this in a specific example: Mr. X decided to take a loan in currency A. Later he decided to convert it into currency B and the bank, in favor of this request, converted the loan from currency A to currency B. Since then, Mr. X will repay the loan in currency B.
Credit conversion and bank charges
Before we apply for a loan conversion, we must think very well about this decision. Let’s not forget that currency conversion can be correlated with the specific costs that the bank will require from us. Sometimes it is necessary to regulate the commission for currency conversion of the loan, it may also involve a change in interest rate or margin. After currency conversion, the installment we pay per month may change.
In addition, it should be remembered that for a bank the creditworthiness of the customer who applies for the conversion of his loan will be of great importance. What’s more, currency conversion of a loan may require a change in the conditions on which our loan was previously based.
currency conversion of a loan
Is a process during which one currency in which the loan has been repaid so far is replaced by another. At the same time, however, it should be borne in mind that currency conversion of a loan may be associated with the need to settle an appropriate commission, payment for an annex to the contract, or a change in the terms of the loan. What does it mean? There is a chance that, among others, the margin and the table of fees correlated with credit will change, etc. It should also be checked whether currency conversion will not generate additional costs related to the next valuation.