First Mortgage Support

By: Michael Challiner

There has been a tremendous boom in overseas property ownership. Whether for personal use as a family, holiday or retirement property or as an investment property, the market shows no sign of slowing down.

In the excitement of making the decision to go ahead, it’s easy to overlook the importance of taking professional advice with regards to the legal situation.

The law in respect of property and mortgages abroad is very different from that in the UK. Local practices, customs and regulations are very different and vary from country to country. One of the most common mistakes made by people purchasing overseas property is to assume that everything will be similar to the UK and there can be nasty shocks in store when the reality of the very different legal system strikes them. Television programmes have highlighted problems in proving ownership, lack of planning permission or plans for three lane highways cutting virtually cutting through the garden.

It needn’t be like this. Expert advisers are in a position to guide buyers through the maze of foreign property purchase and to help them to get independent and specialized advice from professional people such as surveyors, architects and the all-important solicitors.

As far as financing the purchase, it is usual to think about either raising the money on existing UK property or alternatively to arrange a mortgage using the foreign property as security, via an overseas lender.

Assuming you own property in the UK and are buying your overseas property as a holiday home or investment, the easiest route to take would be to arrange a loan on the equity in your home. By releasing this equity you would be able to complete any deal without undue delay.

Alternatively, it may be possible to get an improved interest rate by raising a mortgage on the overseas property you plan to buy. There is an added advantage in this option, in that the legal title of the property would be checked by the lender, who would ensure that all other aspects of the purchase would be in order, such as registration in the buyer’s name, valuation and checking of any building certificates, regulations and planning permissions.

European interest rates are generally lower than those in the UK. Because of this, with Spanish property, most buyers are advised to take out a Euro mortgage, although technically you could choose all major currencies. If buying property in France or Italy then a Euro mortgage is required.

Euro mortgage repayments must be in euros. There will be some currency fluctuations and this should be taken into account when planning your monthly repayments.

(more…)

By: Michael Challiner

You may have heard about the introduction of the Home Information Packs starting in June 2006. One controversial part of the Pack was to be a Home Condition Report, a mandatory survey that the seller of the property would have to have carried out in order to sell the property. However, although the Packs are going ahead, the Home Condition Report won’t be a compulsory part of it.

So firstly, what exactly is the Home Condition Report? It’s the same as a survey, but instead of the buyer having a survey done after making an offer and having it accepted, the seller has to produce the Report to verify the structural state of the property. This means that buyers will have a lot more information about the property from the outset, and it should help reduce the amount of sales that collapse mid-process. In fact, it has recently been estimated that £1 million is lost every single day in costs relating to house sales that fall apart.

Less than a quarter of all homebuyers have a survey anyway – instead choosing to depend on the valuation carried out by the mortgage company. Many purchases fall through simply because the valuation comes out lower than the purchase price – often because they pick up on property defects that could potentially develop into a serious matter. Valuations don’t come cheap, so the buyer will be out of pocket, and the money is effectively lost. The Home Condition Reports could go a long way to alleviating this common situation.

The decision to hold back from making Home Condition Reports mandatory has not been popular in the industry. A number of home information pack providers have been set up to meet the new demand, and they have invested heavily in new computer systems and developing networks of surveyors who will be carrying out the home condition reports. They stand to lose out for the foreseeable future, especially as Home Condition Reports will be an expense to the seller. It is likely that most sellers will not be interested on taking on yet another cost.

It’s bad news for the 4,400 people that trained to be Home Inspectors too. Once assured of a decent job, the demand for Inspectors is not going to be anywhere near the levels that they would have been, had the Reports been made mandatory.

It’s bad news again for first time buyers – they will still need to fork out for the valuation and, if they can afford it, the survey.

Building societies will be happy about the decision however. 84% of those surveyed believed that the Home Condition Reports would have a negative impact on the housing market. That would cut into their profits, of course.

So why have the Home Condition Reports not been made mandatory? The Government say that by making them voluntary first, they will be able to see how well the process works, allowing them to make a more informed decision in future. They are also keen to avoid rocking the housing market from its currently buoyant state.

Sceptics suggest that it is a political decision – with the election looming, the Government won’t want to take any action that could result in stalling the market, thereby losing some potential votes.

(more…)

By: Keith Hunt

California reverse mortgages are becoming extremely popular with seniors in this state since The U.S. Department of Housing and Urban Development (HUD) created one of the first.

“A reverse mortgage in California allows older Americans to supplement social security, meet unexpected medical expenses, make home improvements or take a vacation by converting a portion of the home equity into cash,” states George Lincoln, Vice President of http://FreeFinancialConsulting.com

“FreeFinancialConsulting.com is not a mortgage broker but offer free advice
to the public on all personal money matters, including all home loan, and California reverse mortgages. California reverse mortgages are of interest to seniors and children that are concerned about their parents’ financial well being in later years.”

“Unlike a traditional home equity line of credit (HELOC) or second mortgage, repayment is not required until the borrower no longer uses the home as a principal residence,” continues Lincoln.

“To be eligible for a California reverse mortgage the borrower must be at least 62 years old, own the home and also live in it. The mortgage balance must be low enough that it can be paid off at closing with proceeds from the California reverse mortgage.”
“With a traditional second mortgage loan, or a California home equity line of credit (HELOC), there must be sufficient income versus debt ratio to qualify for the loan, and monthly mortgage payments are required. The California reverse mortgage is different in that it pays the homeowner and is available regardless of current income.”

“The California reverse mortgage amount depends on the borrower’s age, current interest rates, the type of reverse mortgage selected and the appraised value of the home.”

“The loan is not repayable as long as one of the borrowers continues to live in the house and keeps taxes and insurance current. Seniors quite often use the money for medical treatment, home improvement or repairs, long-term care insurance or just to supplement their income.”

(more…)

By: Joseph Kenny

Around 1 out of ever 5 mortgage borrowers last year elected for an interest-only mortgage scheme. Of these, approximately 30% were new first time house buyers. “So what?”, you may be saying. And here’s the problem: in almost every single case where a borrower has elected to purchase a home with an interest-only mortgage, the scheme was one that was advised to them by a mortgage broker.

In nearly every single case, the borrower was not required to show that they could repay the principal sum borrowed on the day the mortgage matures. In other words, no borrower was asked to show that they had taken out an underlying savings program that would have sufficient funds to cover repayment of the principal or any short-fall in the borrowing on the maturity date. Sound familiar? Well it should do, because it has all of the underlying tell-tale signs of the recent endowment mortgage mis-selling scandal.

If you already have an interest-only mortgage, you should not immediately panic that you’re not going to be able to afford to repay your home loan when it matures. However, what you will immediately need to do is to take a look at your loan documents and see if you have been required to put in place some form of savings scheme that will help you to repay the principal outstanding on the loan on the day it matures. For example, is some part of your monthly repayments being put aside in an equity-linked savings account? If so, then there is a good chance that you should be OK; provided, of course, that the amount you are putting away is enough to cover your repayment and that you will not be expected to repay a significant short-fall.

If, however, you discover that you have not been asked to put in place a savings scheme that is going to help you repay the principal sum of the home loan on the day that it matures, then you will need to contact your lender and ask them for some advice as to what action you should take next to rectify the situation. You should keep in mind that even if you have to make top-up payments now, in order to get your program back on track, this is far less likely to cause you a significant financial problem the burden of having to pay a massive one-off lump sum (also known as “balloon”) on the day the loan matures.

(more…)