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Expat Investor : October 2008
EXPATRIATE MORTGAGES Lender Bank of Scotland International Barclays Bank Halifax Irish Permanent International 6.6 7.14 7 6.5 Kaupthing Singer & Friedlander (IOM) Libor + 2 NatWest International NatWest Mtg Service Royal Bank of Scotland Royal Bank of Scotland Int Woolwich 7.19 7.19 7.19 7.19 7.14 PROPERTY INVESTMENT EURO MORTGAGES Rate % Max. % Fee 80 80 75 75 75 80 95 95 80 80 Varies Varies Varies - 0.5-1 0.5-1 £0-£1499 £0-£1499 0.5-1 Varies Notes No products currently available Fixed, tracker and SVR Fixed and tracker rates No products currently available Libor linked product Fixed and tracker rates. Min £50k Standard mortgage range available Standard mortgage range available Fixed and tracker rates available Standard mortgage range available Fast Facts 88519 88500 88503 88503 88511 88507 88507 88510 88510 88512 Figures compiled: 3/9/08. 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. OVERSEAS PROPERTIES Lender Banco Halifax Hispania Barclays Bank HSBC Investec Private Bank Leeds BS Lloyds TSB Newcastle Building Society Norwich & Peterborough BS Investec Private Bank Fast Facts 88517 Barclays Bank Fast Facts 88500 Lender Notes Bank of Scotland International Rate linked to EURO LIBOR + 1.20% with option to set rate for 3, 6, 12 months. Fast Facts 88519 Max 70% LTV. Interest only or capital repayment. Min £400k. Max term 20 years. Arrangement fee up to 1%.Redemption charge applies. Rates also available on same terms in US dollars, Swiss Francs and HK dollars. Rate linked to Barclays Bank 3 month LIBOR rate applicable for a 90 day interest period. For house purchase 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. Rate is based on EURIBOR +1.25% to 2%. Max 70% LTV. Upfront fee of up to 1%. Min adv of £1m in euro equivalent. No redemption fee penalty. Also available on same basis in US$, Swiss Franc Japanese Yen, Australian $, Canadian $, Hong Kong $. Irish Permanent International Rate is based on EURIBOR + 1.24%. Max 75% purchase & remortgage. No redemption fee payable. Fee 1% Fast Facts 88504 (min €1,500) Kaupthing Singer & Friedlander Rate is based on Euro LIBOR + 1.00% to 1.75% with option to set rate for 1, 3, 6 or 12 months. Fast Facts 88511 Max 70% for house purchase or remortgages. Term 5 years interest only – minimum advance £1m, fee varies. NatWest International Fast Facts 88507 Rate is based on 3 month LIBOR + margin. Max 60% purchase & remortgage, on repayment or endowment basis, max term 30 years. Income multiples 3.75 x joint plus 1 x 2nd or 2.75 joint. Minimum advance £100k in euro equivalent. No redemption penalty payable. Fee – refer. Mortgages for borrowers who are paid in euros to purchase or remortgage their main UK property Source: MoneyFacts Location Spain Spain Portugal, Italy & France France, Spain, Malta France, Italy, Spain, Portugal, Monaco & Guernsey Gibraltar, Spain, France Currency Euro Euro Euro, Maltese lira or selected major currency Sterling, euro, US$, Swiss Franc, Japanese yen, Australian $, Canadian $, Hong Kong $ Sterling, euro France, Spain, Portugal, Australia, NZ, Canada, US, Dubai, Hong Kong, Singapore & UK Gibraltar Royal Bank of Scotland International International Private Finance Source: MoneyFacts Gibraltar & Southern Spain Spain France, Spain, Portugal, Italy, Florida, South Africa, Bulgaria Currency of choice Sterling Sterling Euro, sterling Euro, sterling, US dollar Fast Facts 88520 88500 88503 88517 88505 88506 88516 88509 88510 88518 FOREIGN CURRENCY LOANS Lender Location Bank of Scotland International Barclays Bank Investec Private Bank Irish Permanent International Kaupthing Singer & Friedlander NatWest International UK property UK property UK & international property UK property UK property UK property Royal Bank of Scotland International UK property Currency switching allowed on all major currencies Source: MoneyFacts Financing property in uncertain times Roy Winston, Chairman at Credit & Mercantile, examines the financial issues that many property investors are facing in a time of uncertainly. If you have ever purchased a property under its market value you will have quickly discovered that mortgage lenders will usually provide finance against the purchase price or the value, whichever is the lower. This can prove problematic, particularly if your cash is tied up and you can’t release the equity quickly enough in order to secure the purchase Most lenders will only offer a percentage of the purchase price, so if you don’t have a sizeable deposit you could lose out on the deal altogether. The secret to borrowing on the value of a property rather than the purchase price is to undertake a two- stage process. Initially obtaining a short-term loan based on the value of the property, and then subsequently effecting a re-mortgage with a long-term lender. When the subsequent remortgage is provided by a long-term lender it will be purely based on the value of the property and their standard lending criteria. Until recently getting the benefit of a good value purchase within the borrowing hasn’t been too much of a problem as some high street lenders have accepted a very short 22 EXPAT INVESTOR ? period of only a few days between initial purchase and re-finance. Due to the changed market conditions, this has become too high a risk for many high street lenders and as such, they have withdrawn this facility. The period between initial purchase and re-finance is now about 24 weeks.With inexperienced investors and even first time buyers previously able to purchase without any kind of a deposit, lenders have become concerned that in the event of financial difficulty a borrower would be more likely to walk away from a property in which they had invested no real equity. The need for speed Speed is vital even in today’s property market.With house prices reportedly falling in certain areas, it is possible that some real bargains might be found but opportunities and good deals are only achieved with the ability to source funding. The last thing you need is a delay with your property finance to hold up negotiations or the signing of a contract – which could lose you that vital deal. So, how do you go about bridging this gap in the current October 2008 market conditions when many lenders are withdrawing products and tightening lending criteria? A viable option may be to obtain a short-term loan in order to obtain the funding to complete within your timescales. Then, when the property has been secured you can redeem that loan with a long-term lower cost mortgage from a high-street lender. The advantage of doing this is that the short-term loan could be ready in a matter of days and allow the purchaser to borrow against value rather than purchase price. This can minimise the overall deposit that is required to secure the property if the property was bought very competitively. In most cases a short-term lender will lend on the value of the security, not the purchase price. Despite current market conditions it is still possible to borrow 100% of the purchase price if the value is substantially above the purchase price. You should be able to get a decision, in principle, straight away, without any bureaucracy or lengthy credit committees. Using short-term finance offers more flexibility and if the investment is sound, with a true and realistic market value has been established, it should be possible to find the right lender who will lend on the market value of the property regardless of the underlying purchase price. Obviously, charges will be higher on a short-term loan than for a standard long term mortgage and this may seem like an expensive option on first glance, but in reality the long term benefits of securing a property sometimes worth far more than its purchase price will outweigh the costs associated with borrowing on a short term basis. Once a property has been purchased using a short-term loan, a re-mortgage will be required enabling you to borrow against the open market value of the property. However, you have the time to look around to find the best deal in the marketplace. In some cases the reason for a property being purchased below market value is due to refurbishment works that may be needed in order for the property to reach its full value. This could be where the investment opportunity lies. If a short-term loan can be obtained, the refurbishment work might also be funded by that lender to reach the enhanced market value, after which the remortgage can take place. When weighing up the options expatinvestor.com MOVING RATES Fast Facts 88519 88500 88517 88504 88511 88507 88510 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. from a short-term lender, find out the following. ? Can they put together a cost effective deal quickly and definitively? – you can’t afford to waste valuable time if you want to secure that property and reap the rewards of a competitive price. ? Are they the true principal lender? – A true principal lender that will not need to sub-charge their own legal charge over the property or seek credit approval from any third parties. ? Obtaining short-term finance may also offer a more cost-effective means of re-building a credit history than a sub-prime mortgage with high ‘early exit penalties’. ? Are they credible? A knowledgeable professional should be able to assess your proposal straight away, without any bureaucracy or lengthy credit committees. A decision in principle might be given immediately, even on your first phone call. ? Do they really understand their market? If they decide not to lend it is possible that the investment opportunity isn’t sound. ? Beware – there are many new entrants to the bridging loan market. Do your homework to ensure you are dealing with a reputable finance house, authorised by the FSA and established for a number of years. Fast Facts 88480