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Expat Investor : December 2007
Serving expats for more than 16 years J In this issue For five years or more, borrowers had never had it so good. But rolling across the Atlantic Seaboard came clouds darkening our mortgage horizons and puzzling us with labels it took us a while to learn. We ren't sub-prime lending crises other countries' concerns? What had British expats to do with the US' mortgage debt problems and why should their lending criteria affect the borrowing terms we were being offered over this side of the pond? Well, so much for the history. There can be few of us now who don't know exactly what a sub- prime loan is or how America's slap- dash lending on the back of low interest rates lead to repackaged financial debt instruments that international financial companies bought and then couldn't sell, and how the whole sorry saga rushed up to bite us on the derriere. As 2007 draws to a close, the mortgage market presents a very different picture to one it showed us at the start of the year. Sterling mortgage rates have hit a nine-year high and as hundreds of thousands of borrowers face the end of their two-year fixed loan periods, expats will have to move fast to shore up another good deal. Most How to survive the mortgage squeeze Investor EXPAT g £4.95/ 7.50/US$7.50 Dec 2007 Bringing advisers and investors together Investor EXPAT Tony Hetherington Our offshore financial investigator exposes a financial scam. Offshore savings We explain why expat savers have plenty to smile about. Equity release plans These revamped plans are worth a second look. The art of gifting There's plenty of scope to bestow financial gifts on loved ones rather than the tax man and this reports tells you how. Healthcare forum The international healthcare insurance experts have their say about what to expect in 2008. Regulars 10 Offshore funds 12 Offshore savings accounts 21 Property investment 22 Offshore mortgage market Next issue Where to invest in 2008 Manx money tools Offshore mortgages Fo r eign travel insurance 6 8 14 16 4 www.expatinvestor.com Expat borrowers need to revisit their mortgages and borrowing terms to ensure they start 2008 with the cheapest loan on the market. For more information from our advertisers or about products featured in Expat Investor enter the Fast Facts number onto the Reader Reply Service coupon on page 20 or go to: expatinvestor.com Fast Facts 10000 www.expatinvestor.com "There are those that you know you should read, and then there's the magazine you will read." To register for Expat Investor digital edition, visit the website at www.expatinvestor.com Serving expats for more than 18 years forecasters expect the Bank of England's base rate to move higher. While base rate has been held at 5.75%, lending experts warn that we could see both discount and tracker loans becoming more expensive for new customers. Indeed, several UK lenders have already raised their tracker rates to new borrowers. Those on fixed rates could face a double shock as, in the first place rates have risen over the past two years, and, on top of this, the credit crisis in the global financial markets has forced the price of loans even higher. Strategies must be formulated to survive the credit squeeze, say financial analysts. A favoured plan for those in a position to follow it is to pay off more of their mortgage than is required by the monthly repayment schedule. Overpayments will not only cut interest costs but also reduce the overall borrowing term. However, any borrower embarking on such a strategy must check that there are no inherent penalties or stiff charges, known as early repayment charges (ERCs), incurred for making overpayments. By and large, the mortgage sector accepts mortgage overpayments of up to 10% per annum without imposing ERCs. Another favoured strategy to consider is remortgaging. Always seek independent financial advice to ensure that you won't be leaping out of the frying pan into the fire. If you have a standard variable rate loan, take time out to calculate how much better off you'd be each month were you to sign up to a different kind of loan. Some expats will be tempted to consider longer-term borrowing products. However, a number of brokers report that the UK government's plans to boost the popularity of long-term fixed-rate mortgages is having little impact. Chancellor Alistair Darling announced in his Pre-Budget Report that he wanted to bring these deals further into the mainstream. To date, such products have only secured a small share of the mortgage market. Mr Darling believes that the stability long-term mortgages offer will boost homebuyers' confidence. However, as many mortgage brokers point out, fixed rate loans of up to 25 years have been available for some time but don't appear to have caught the public's attention or interest. The lack of flexibility in these products still puts off many borrowers. Having said that, most long-term fixed deals currently offer an interest rate of around 6%, which isn't that much higher than the rates available for many two-year fixed deals. However, should short-term fixed rate products drop off in 2008, lenders are predicting that longer- term rates will struggle to compete. Once again, expats are urged to seek expert advice -- no one-size mortgage fits all, and it might be that a 25 year loan would suit your circumstances. If you are considering a remortgage, plan ahead. Brokers recommend that a remortgage application be made at least two months ahead of the end of the existing loan ter m. There may be some lee-way, however, as many mortgage offers remain valid for at least six months. Ifyoudohaveawhiletorunon your present loan, but see a good deal in the offing, don't delay -- take the deal to an adviser and do the sums. You might just find you'll fare better by jumping the mortgage ship ahead of the term end. Readers should turn to page 22 to check out the offshore mortgage market providers and their current lending rates and ter ms. OUT NOW! *THE ANNUAL INTEREST RATE QUOTED IS VARIABLE, GROSS AND EFFECTIVE FROM 1ST OCTOBER 2007. THIS RATE IS PAYABLE WHERE NO MORE THAN 3 WITHDRAWALS ARE MADE IN A BONUS YEAR (1ST APRIL -- 31ST MARCH) WITH A RATE OF 6.00% PAYABLE WHERE 4 OR MORE WITHDRAWALS ARE MADE IN THIS PERIOD. THIS ACCOUNT IS ONLY AVAILABLE ONLINE TO INDIVIDUALS AGED 18 OR OVER AND IS NOT AVAILABLE TO UK RESIDENTS. Maximum balance is £1,000,000. Bradford & Bingley International Limited, International eSavings Unit, PO Box 263, Douglas, Isle of Man IM99 2JJ British Isles. Registered in the Isle of Man No. 052221C. Registered Office: 30 Ridgeway Street, Douglas, Isle of Man, IM1 1TA. With share capital and reserves in excess of £266 million. Copies of our most recently audited accounts are available on request. Bradford & Bingley plc undertakes to discharge the liabilities of Bradford & Bingley International Limited in so far as the latter is unable to discharge them and remains a subsidiary of Bradford & Bingley plc. Under Isle of Man legislation, eligible deposits made with an Isle of Man office of Bradford & Bingley International Limited are covered by the Depositors Compensation Scheme contained in the Banking Business (Compensation of Depositors) Regulations 1991 (as amended). This advertisement does not constitute an invitation to make deposits in any jurisdiction to any person to whom it is unlawful to make such an invitation or offer in such jurisdiction. Interest rates are variable. Your tax position will depend on your personal circumstances and you may wish to seek guidance from your tax adviser. It is the responsibility of the depositor to declare any interest received to their relevant tax authority. EU residents who are subject to retention tax by way of the EU Savings Tax Directive will need to consider the effect of the retention tax that will be applied to their accounts. Licensed by the Isle of Man Financial Supervision Commission to conduct Banking Business. %* GROSS P.A. 6.50 eSaver Internet Savings Account . Minimum balance £1 . No hassles . Helps you save . Manage from home 24/7 Available now at www.bbi.co.im/esaver
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