Foreign Mortgages?

[Daydreamjay]

Hi Group, my first post here!

I am actively looking for a property to buy abroad in the region of £50,000, half of which would be a cash deposit, the other half mortgaged.

I need to know how foreign mortgage lenders vet you, do they use the normal UK credit reference agencies such as Equifax and Experion? The reason I ask is that my credit score is not very good and even though I have credit cards and also a current mortgage etc, I am most certainly sub-prime.

So my question is - will my UK credit rating affect my chances of a mortgage abroad?

Thanks,
Jay

 

[checkdryne]

Overseas Mortgage

Hi Group, my first post here!

I am actively looking for a property to buy abroad in the region of £50,000, half of which would be a cash deposit, the other half mortgaged.

I need to know how foreign mortgage lenders vet you, do they use the normal UK credit reference agencies such as Equifax and Experion? The reason I ask is that my credit score is not very good and even though I have credit cards and also a current mortgage etc, I am most certainly sub-prime.

So my question is - will my UK credit rating affect my chances of a mortgage abroad?

Thanks,
Jay

I would like to build on this question. Why would an investor consider purchasing real estate overseas? What are the inherent benefits?

 

[John]

Hi Jay, Welcome to TotallyProperty.com

It really does depend on where you are buying (and in some cases even who you are buying off).

From what I see you are hoping to purchase a property for 50,000 sterling with a 50% mortgage of 25,000 and intend to cover the rest with your own savings?

I would say from these figures that no matter what your credit history in the UK, you will have a very good chance of getting a mortgage in many overseas locations.

Maybe you could tell us what locations you are considering? Hopefully then depending on the location, some of our members here with local knowledge can maybe advise about mortgage options available.

One thing I would draw to your attention is that you should be calculating legal and other expenses into your calcuations, these can range anything from 5% to 15% of the property price depending on the area.

 

[Janoulaki]

Hi Jay,

In most of the European countries when purchasing property you will need to go through credit check, however, as mentioned by John, your requirement for mortgage are 50% which is very good, even in UK.

Good luck!

 

[CaroleBay]

Hi Jay

John is right, it really does depend on the country you are wanting to buy property in. Different countries will have different attitudes.

I can only talk on the criteria for applying for mortgage finance from French banks.

Some of the French banks do UK credit checks, but with all of them, their main concern is that a person keeps within the income vs expenditure criteria - only one third of monthly income to service the monthly cost of any existing borrowings and financial commitments, and of course this has to include the monthly cost of the French mortgage as well.

To check this, they require the latest 3 months bank statements and the latest statements of any loans (mortgage, personal/student loans, credit cards, etc). Everything (income coming in and expenditure going out) is cross checked and referenced.

Legal costs (Notaire fees) for a new property assume about 5% of the purchase price, but for an older existing property the costs will be aprox 8%.

Some banks do have minimum lending limits, which on a mortgage of £25,000 (35,894 Euros on todays exchange rate),will reduce your choice of banks.

Carole Bayliss
mortgagefrance

 

[Daydreamjay]

Thanks for your replies, very helpful.

I was hoping to purchase somewhere in Romania. I was looking in particular at these apartments the City Lights development that is listed on the front page of Romanian Properties Ltd. website.

There are no prices on them yet but I would be able to put about 50% down as long as they aren't more than £75,000

Any comments on the mortgages in Romania? Or on my choice of purchase?

 

[Cagla]

Mortgages in Turkey

Hi,
Why don't you think about Turkey?You can find an apartment in £30.000 and villas beginning from £80.000.If you buy an apartment, maybe you do not have to get a mortgage but if you need, here Turkish banks also give mortgages for foreign buyers.
As an example, if it is for 18 months for Euro currency, monthly interest rate is 0.60% and you will pay €589 per a month which decreases as the term increases.This is arranged according to the loan amount of €10.000.
I here give you the link of Akbank below so also you can check by yourself.
Akbank - Products & Services - Akbank Mortgage

Better climate, better prices, mortgage possibilities, why not?
I will be glad to reply any of your questions if you need.

Best regards,
Cagla Karahan
Cekul Home Page
[email protected]

 

[The Soup Dragon]

Hi Jay

Looking for only 50% Loan To Value should help. Not only does that make it less of a risk to lenders (some will take your business, some will say no),but it opens up builders loans to you. There are a lot of projects about in countries you will be interested in (including Romania) where you can get a builders loan for around 50% of the purchase price. These loans tend to be over fairly short terms (typically 5 to 10 years) and around the 6% to 9% mark for interest rates. This makes the monthly installements high, so you obviously will want to check that the rent should cover most if not all of the installments. There are no credit checks for the builders loans I've looked into. They are typically offered in areas where it is either hard or impossible to get mortgages so that investors have the means of leveraging their investment without borrowing against other property.

Ready2Invest have commercial investment opportunities on the main ring road round Bucharest where investors can have a builders. (I don't wish to plug Ready2Invest, its just an example of a builders loan being offered.)

 

[infoberlin]

I just love this LVT stuff.
Brits are so nuts about getting mortgages and LVTs that they don´t realise all of this comes with a price:
a much higher (maybe even inflated) purchase price.

What´s the point buying a 100K property with 50% down if you can buy the same property for 70K if you bought it cash.


Oh dear, I just realised I missed the agency "hype" - since they sell the sweat deal with capital appreciation (IF that materialises).

 

[The Soup Dragon]

Inforberlin. What you say is true in parts of the world, but not others. For instance, in the UK being a cash buyer only gives you an advantage becuase you can move quickly and (in England or Wales) it ends the chain. People in Britain are well aware of how leveraging can (& does) work in their favour.

 

[infoberlin]

Inforberlin. What you say is true in parts of the world, but not others. For instance, in the UK being a cash buyer only gives you an advantage becuase you can move quickly and (in England or Wales) it ends the chain. People in Britain are well aware of how leveraging can (& does) work in their favour.

well, I believe you´re wrong on several fronts:
a) cash beats in ALL countries, not just England. Nothing beats cash.
b) mortgage requests get turn down mostly because banks cannot verify non-residents "home" income details.
c) I often doubt they realise they are paying a much higher price for overseas properties with the leverage hype.
d) figures are mostly misrepresented because noone takes into account how expensive it is to cancel a mortgage if you want to cancel prematurely and the penalties you have to pay (since this does not fit into the overpriced agency hype).

Good luck to all.

 

[checkdryne]

Credit is not so important in overseas Investments?

Hi Jay, Welcome...

It really does depend on where you are buying (and in some cases even who you are buying off).

From what I see you are hoping to purchase a property for 50,000 sterling with a 50% mortgage of 25,000 and intend to cover the rest with your own savings?

I would say from these figures that no matter what your credit history in the UK, you will have a very good chance of getting a mortgage in many overseas locations.

Maybe you could tell us what locations you are considering? Hopefully then depending on the location, some of our members here with local knowledge can maybe advise about mortgage options available.

One thing I would draw to your attention is that you should be calculating legal and other expenses into your calcuations, these can range anything from 5% to 15% of the property price depending on the area.

Hi,

I'm new to the forum as well as real estate investment. Having read your post, I wanted to make sure I got the bottom line. Are you saying that when an investor has the money/cash to cover the investment overseas, their credit history has no bearing?

 

[The Soup Dragon]

Checkdryne

I don't think John is saying that in his post. His point is that because you can raise 50% of the purchase price, potential lenders will realise that if you don't meet your mortgage payments they can simply take possession of your foreign property and sell on without losing any money. Because of this many lenders will look more favourably on a poor credit history (if indeed they look at yur credit record in the UK.)

The extent to which they will look favourably on your credit record will vary from country to country and lender to lender.



Infoberlin

A) In the UK (as with most other countries where the property / mortgage market is mature) it isn't the norm to be a cash buyer. Sellers expect to sell the buyers that require finance from a lender. The exceptions to this tend to be for properties for which you won't get a mortgage (property with problems, normally structural, but could be in high rise blocks etc.)
B) Different banks have different affordability criteria. French banks, for example, often require last 6 months payslips. It is for the buyer to determine what their budget is based on their own money and what can be borrowed (for which they should check what they can prove they caan afford.)
C) I hear what you are saying, but it really does depend on the market and how much you are willing to stump up front. For instance, you could buy a property in an emerging market for 70% (or less) of what others will pay if tou stump up all the funds up front before the property is built. Here you take the risk that the property will not be built and you lose everything.
D) By that logic the purchase price is also overinlated due to solicitor fees, tax, etc. Buyers should be aware of the expenses that will be ocured if they pull out / sell on prematurely. There is always a risk that th9is might happen no matter how unlikely they feel it may be.

 

[The Soup Dragon]

Checkdryne

I don't think John is saying that in his post. His point is that because you can raise 50% of the purchase price, potential lenders will realise that if you don't meet your mortgage payments they can simply take possession of your foreign property and sell on without losing any money. Because of this many lenders will look more favourably on a poor credit history (if indeed they look at yur credit record in the UK.)

The extent to which they will look favourably on your credit record will vary from country to country and lender to lender.



Infoberlin

Taking your comments in turn:
A) In the UK (as with most other countries where the property / mortgage market is mature) it isn't the norm to be a cash buyer. Sellers expect to sell the buyers that require finance from a lender. The exceptions to this tend to be for properties for which you won't get a mortgage (property with problems, normally structural, but could be in high rise blocks etc.)
B) Different banks have different affordability criteria. French banks, for example, often require last 6 months payslips. It is for the buyer to determine what their budget is based on their own money and what can be borrowed (for which they should check what they can prove they caan afford.)
C) I hear what you are saying, but it really does depend on the market and how much you are willing to stump up front. For instance, you could buy a property in an emerging market for 70% (or less) of what others will pay if tou stump up all the funds up front before the property is built. Here you take the risk that the property will not be built and you lose everything.
D) By that logic the purchase price is also overinlated due to solicitor fees, tax, etc. Buyers should be aware of the expenses that will be ocured if they pull out / sell on prematurely. There is always a risk that th9is might happen no matter how unlikely they feel it may be.