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Expat Investor : July August 2008
Back in the beginning of the year, Fool.co.uk predicted that UK house prices would fall 20% this year slashing the average price of a home in Britain from £196,000 to £153,400. Homeowners who bought before spring 2004 are sitting pretty A 20% fall in house prices will bring down the average price of a house in the UK to Spring 2004 levels. So, anyone who bought a home after then will find they have made a capital loss. Put another way, their home was ‘best before’ April 2004 because it will be worth less than four years ago. This does not mean they are in negative equity because negative PROPERTY INVESTMENT expatinvestor.com 22 EXPAT INVESTOR ? July/August 2008 Lender Notes Bank of Scotland International Rate linked to EURO LIBOR + 1.00% to 1.25% with option to set rate for 3,6, 12 months. Fast Facts 66519 Max 75% LTV. Interest only or capital repayment. Min £500k. Max term 20 years. Arrangement fee min 0.25% – max 1%. Redemption charge applies. Rates also available on same terms in US dollars, Swiss Francs and HK dollars. Barclays Bank Rate linked to Barclays Bank 3 month LIBOR rate applicable for a 90 day interest period. For house purchase Fast Facts 66500 only. On an interest only basis, max 65% LTV, advance £500k, term 5 to 20 yrs and fee 0.5%. Redemption charge applies. Barclays Euro Current Account required. Rates also available on same terms in dollars, Yen, Swiss Francs and Hong Kong dollars. HSBC International Rate is based on euro refinancing rate + 1.25%. Max 70% for house purchase and remortgage if on repayment Fast Facts 66503 basis, or 65% for purchase and remtg on interest only basis. Max term – 25 years on repayment basis or 15 years on interest only basis. Advance €100,000 – 1m, fee €1,250. Income multiples 3.25 x 1st plus 1.25 x 2nd or 2.5 x joint. Applicant must have euro income. No redemption penalty payable. Investec Private Bank Rate is based on EURIBOR +1% to 1.75%. Max 70% LTV. Upfront fee of up to 1%. Fast Facts 66517 Min adv of £500k in euro equivalent. Also available on same basis in US$, Swiss Franc Japanese Yen, Australian $, Canadian $, Hong Kong $. Irish Permanent International Rate is based on EURIBOR + 1.24%. Max 75% purchase & remortgage. No redemption fee payable. Fee 1% Fast Facts 66504 (min €1,500) Kaupthing Singer & Friedlander Rate is based on Euro LIBOR + 1.00% to 1.75% with option to set rate for 1, 3, 6 or 12 months. Fast Facts 66511 Max 70% for house purchase or remortgages. Term 5 years interest only – minimum advance £500k, fee varies. NatWest International Rate is based on 3 month LIBOR + margin. Max 60% purchase & remortgage, on repayment or endowment Fast Facts 66507 basis, max term 30 years. Income multiples 3.75 x joint plus 1 x 2nd or 2.75 joint. Minimum advance £100k in euro equivalent. No redemption penalty payable. Fee € refer. Mortgages for borrowers who are paid in euros to purchase or remortgage their main UK property Source: MoneyFacts Lender Location Currency Fast Facts Banco Halifax Hispania Spain Euro 66520 Barclays Bank Spain Portugal, Italy & France Euro 66500 HSBC France, Spain, Malta Euro, Maltese lira or selected major currency 66503 Investec Private Bank France, Italy, Spain, Portugal, Sterling, euro, US$, Swiss Franc, Japanese yen, 66517 Monaco & Guernsey Australian $, Canadian $, Hong Kong $ Leeds BS Gibraltar & Spain Sterling 66505 Lloyds TSB France, Spain, Portugal, Australia, NZ, Canada, US, Dubai, Currency of choice 66506 Hong Kong, Singapore & UK Newcastle Building Society Gibraltar Sterling 66516 Norwich & Peterborough BS Gibraltar & Southern Spain Sterling 66509 Royal Bank of Scotland International Spain Euro or sterling 66510 Conti Financial Services Can arrange finance in over 40 countries 66518 Source: MoneyFacts Lender Rate % Max. % Fee Notes Fast Facts Bank of Scotland International 6.3 85 Varies Fixed and tracker rates 66519 Barclays Bank 7.39 95 Varies Fixed, tracker and SVR 66500 Halifax 7 75 £499 Fixed and tracker rates 66502 HSBC International 6.44 90 Varies Fixed, discounted and tracker rates 66503 Irish Permanent International 6.5 80 1 % (Min £5k) Tracker rates available 66504 Kaupthing Singer & Friedlander (IOM) 6.75 80 Varies Min £500k 66511 NatWest International 7.69 85 0.5 Fixed and tracker rates. Min £50k 66507 NatWest Mtg Service 7.19 90 0.5 All products available 66507 Norwich & P'boro 7.05 75 - Tracker rates 66509 Royal Bank of Scotland 7.19 85 0.5 Discount, fixed and flexible rates 66510 Royal Bank of Scotland Int 7.44 85 0.5 Fixed, tracker and flexible rates 66510 Scarborough Building Society 7.24 95 Varies All products available 66513 Woolwich 7.14 80 Varies All products available 66512 Figures compiled: 3/6/08. Source: MoneyFacts www.moneyfacts.co.uk Expatriate = UK residents working abroad short-term and buying a property in the UK. Lender may allow property to be let. EXPATRIATE MORTGAGES EURO MORTGAGES OVERSEAS PROPERTIES Your home was ‘best before’ April 2004 Lender Location Fast Facts Bank of Scotland International UK property 66519 Barclays Bank UK property 66500 HSBC Bank International UK property 66503 Investec Private Bank UK & international property 66517 Irish Permanent International UK property 66504 Kaupthing Singer & Friedlander UK property 66511 NatWest International UK property 66507 Royal Bank of Scotland International UK property 66510 Currency switching allowed on all major currencies Source: MoneyFacts FOREIGN CURRENCY LOANS All the information on interest rates published in Expat Investor is checked regularly and to the best of our ability. However, rates do change on all accounts sometimes frequently and we advise readers to double check those interest rates which they find appealing before beginning any transactions with the deposit-takers concerned. MOVING RATES equity is related to the size of a loan taken out to buy a property. A capital gain or loss is solely a function of the price of an asset. The West Country is most vulnerable to a property downturn People in the South West had to have bought their homes earlier than the national best-before date to sidestep a 20% fall in property prices. They should have bought their homes before January 2004. In the winter of 2003, the average price of a home in the region was £163,000, which is approximately a fifth less than the average price today. East Midlands and the South East also fare badly. Homeowners in the East Midlands who bought their properties after January 2004 are some of the most likely to incur a capital loss. The best-before date for the South East is also January 2004. The luck of the Irish and the canny Scots The best-before dates for Scotland and Northern Ireland are April and October 2006 respectively - some two years later than the national average. Since Spring 2004, property prices in Northern Ireland and Scotland have more than doubled compared to a 20% increase nationally. David Kuo, Head of Personal Finance at Fool.co.uk, says, “A 20% fall in house prices will mean that many people who bought their homes after Spring 2004 will suffer a capital loss. “It is vital to differentiate between capital loss and negative equity. While a capital loss is beyond the control of homeowners, mortgage borrowers can overcome negative equity by reducing the size of their outstanding mortgage compared to the value of the property. “It is also important to appreciate that falling house prices are not disastrous, even for many existing homeowners. “A 20% fall in house prices across the board will narrow the gap between the value of your home and a property further up the housing ladder. It will make up-sizing more affordable. “Fool.co.uk therefore urges the Government to stop meddling in the housing market, and allow property prices to find their own levels. In its attempts to help homeowners, it is killing with kindness. “It is holding back a dynamic market that needs to fall as well as rise to move forward.”
May June 2008