Mortgages

The Association of Mortgage Intermediaries (AMI) has launched its latest advice paper, giving guidance to members who are thinking of making a purchase of property abroad.

The intention of the factsheet, entitled “Advising clients thinking of buying abroad”, is to make people aware of the regulations governing foreign property purchases and the potential pitfalls that come along with them.

Risks include currency difficulties caused by exchange rates and confusion over quotations, legal issues, such as varying legal systems and obligations, and the process of buying the property itself and the stages that must be fulfilled in order to make the purchase official.

“An increasing number of UK residents are buying property abroad, be they holiday homes, future homes to retire to or as buy-to-let investments,” said Rob Griffiths, associate director of AMI.

“There are many considerations for mortgage intermediaries when advising their clients on such a purchase and they must take great care to ensure the process goes as smoothly as possible.”

Mr Griffiths also noted that the key point to remember is that there will be variations in the process involved in making a property purchase outside the UK, no matter how similar it seems on the surface.

Establishing a bank account, ensuring you have the correct insurance cover and determining the taxation issues of a particular country were all important and potentially problematic areas, the AMI concluded.

Source: Adfero Ltd

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Barclays Bank today (April 30, 2006) announced the launch of mortgages in Dubai that have been specifically designed to meet the requirements of buyers in the Emirate’s booming property market. The new mortgage range will be available in four different currencies (UAE dirhams, pounds sterling, Euro and US dollars) and will be approved within 24 hours. Barclays will be the first mortgage provider in Dubai to offer customers an extensive number of currency options and quick mortgage approval.

David Roberts, board member of Barclays PLC and chief executive of the bank’s International Retail and Commercial Banking operations, said; ‘Barclays has clearly stated its international ambitions and Dubai is an attractive, fast growing market in which Barclays wishes to grow. Today’s launch of new mortgage products in Dubai is a tangible example of how we are using our proven global expertise and competitive advantage to develop innovative product propositions that benefit our existing and new clients.’ In February 2006, Barclays announced its intention to increase the proportion of profits it generates from outside the UK to 50 per cent within three years, from 40 per cent in 2005.

The new mortgages will be offered by the banks international retail arm, International Retail and Commercial Banking, which is focused on growing Barclays presence in attractive markets, including Dubai. International Retail and Commercial banking operates in 21 countries with over 10 million customers and 46,000 employees Barclays is offering the following mortgage products to UAE residents and non residents: “Owner-occupiers wishing to buy a completed home ready to move in Off Plan Buyers looking at homes that are planned or under construction ‘Buy-to-Let’ mortgages for prospective landlords Philip Ward, Barclays’ Head of Mortgages in Dubai says,

‘Dubai is maturing into a home-owning environment, and Barclays expects to shake up the market with its strong product range and customer-focused service levels. By bringing our experience, multi currency and service driven approach that has been developed over many years, we are confident that our mortgages will be very attractive to Dubai home buyers, whether home owners or investors.’

Barclays is one of the world’s leading banks and Barclays has the largest presence of any UK bank in the European non resident mortgage market, serving mortgage customers through its operations in Spain, France, Portugal and Italy. Barclays is also one of the UK leading mortgage providers with a mortgage book of GBP 59.6 billion (AED 387.4 billion) and the leading mortgage provider in South Africa following its acquisition of a majority state in Absa.

Building on this experience, today’s announcement further strengthens Barclays international mortgage credentials, with the addition of Dubai in its portfolio. Barclays mortgages in Dubai will be available from a minimum of AED 500,000 up to a maximum of AED 7.5 million, in areas where all nationalities are allowed to own residential property.

All mortgages will be available in four different currencies – UAE dirhams, pounds sterling, Euro and US dollars. For sterling, dollar and euro loans, customers are expected to have an income source in the same currency. Thereafter, the principle will be sanctioned and drawn down in AED and then converted to the foreign currency. In another benefit, a team of expert mobile Barclays mortgage advisors will meet customers to discuss the best mortgage for their requirements.

The Advisors will travel around Dubai in Barclays-branded Minis. Loan approvals will be made within 24 hours, at competitive interest rates (all rates indicated below are variable rates). Mr Wards adds; ‘With the recently announced changes in the property law ownership in Dubai, specifically with regards to non resident ownership, and the ongoing highly positive economic climate in Dubai, we believe that now is exactly the right time to bring our breadth of international mortgage experience to this market’. ‘We have examined the marketplace in great detail, and we believe that our products will hit the right note with prospective buyers.’ Source: AME Info Related Links: Official Website for Barclays Dubai

Barclays is one of the world’s leading banks and Barclays has the largest presence of any UK bank in the European non resident mortgage market, serving mortgage customers through its operations in Spain, France, Portugal and Italy. Barclays is also one of the UK leading mortgage providers with a mortgage book of GBP 59.6 billion (AED 387.4 billion) and the leading mortgage provider in South Africa following its acquisition of a majority state in Absa.

Building on this experience, today’s announcement further strengthens Barclays international mortgage credentials, with the addition of Dubai in its portfolio. Barclays mortgages in Dubai will be available from a minimum of AED 500,000 up to a maximum of AED 7.5 million, in areas where all nationalities are allowed to own residential property.

All mortgages will be available in four different currencies – UAE dirhams, pounds sterling, Euro and US dollars. For sterling, dollar and euro loans, customers are expected to have an income source in the same currency. Thereafter, the principle will be sanctioned and drawn down in AED and then converted to the foreign currency. In another benefit, a team of expert mobile Barclays mortgage advisors will meet customers to discuss the best mortgage for their requirements. The Advisors will travel around Dubai in Barclays-branded Minis.

Loan approvals will be made within 24 hours, at competitive interest rates (all rates indicated below are variable rates). Mr Wards adds; ‘With the recently announced changes in the property law ownership in Dubai, specifically with regards to non resident ownership, and the ongoing highly positive economic climate in Dubai, we believe that now is exactly the right time to bring our breadth of international mortgage experience to this market’. ‘We have examined the marketplace in great detail, and we believe that our products will hit the right note with prospective buyers.’ Source: Related Links:

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Bank of Ireland today announced details of a new venture with leading Spanish bank, ‘la Caixa’ to provide additional mortgage options for Irish people buying property in Spain. ‘la Caixa’ is the third largest bank in Spain with 4,800 branches and 6,800 ATMs.

The Bank’s venture with ‘la Caixa’ offers three options to people seeking to finance a property purchase in Spain.

1. Equity Release from Bank of Ireland Mortgages
With the value of property in Ireland having increased by 80% over the past 5 years, most people have accumulated significant equity in their property. Customers with an existing mortgage with us may be in a position to release equity, which can then be used to buy their dream property in Spain

We will lend up to 90% of the equity built up in a home, subject to repayment capacity, at new business rates including tracker, fixed or variable. Mortgage terms available range from 5 to 30 years.

2. A Mortgage from “la Caixa”
Alternatively, customers can borrow directly from “la Caixa”, with the mortgage secured on a Spanish property. Customers can borrow up to 75% of the value of a property up to €500,000 and 60% of the value of a property above €500,000 at a competitive interest rate, 12-month EURIBOR + 1.20%. Customers can avail of mortgage terms of up to 30 years, with the option of interest only for the first two years.

“la Caixa” will ensure that all dealings will be in English and that third parties, such as solicitors and valuers, will be recommended. An arrangement fee of 1% of the value of the mortgage is payable to “la Caixa”. Applications forms and details of a “la Caixa” mortgage are available from mortgage advisers in every Bank of Ireland branch countrywide.

3″la Caixa” Mortgage and Equity Release With Bank of Ireland Mortgages

Customers can apply for a “la Caixa” mortgage to purchase the property (subject to maximum loan to value as outlined in no. 2 above). Customers can apply to fund the remainder of the purchase price and costs associated with buying a home in Spain (such as stamp duty, VAT, tax and arrangement fee etc) via an equity release mortgage with Bank of Ireland Mortgages.

Gabriel Bannigan, Head of Strategy & Marketing, Bank of Ireland Mortgages said: “This is a positive development in European banking and is a direct response to the growing trend of Irish people buying property abroad. Without knowledge of the local market, financing the purchase of properties abroad can be difficult. This can be further compounded by language difficulties. The venture between Bank of Ireland and “la Caixa” offers Irish people both practical support and the reassurance that they are dealing with reputable institutions”.

la Caixa, General Manager for Southern Spain, Mr. Manuel Romera, added: “We are delighted to offer customers of Bank of Ireland the additional option of a la Caixamortgage to finance the purchase of a property in Spain. In addition, customers can also avail of the broad range of other financial services offered through our extensive branch network”. Bank of Ireland’s mortgage advisers are fully trained to advise people on the most appropriate option for their individual circumstances. People planning to buy a Spanish property can call into any Bank of Ireland branch to speak to a mortgage adviser and have the options explained.

Source: FineFacts

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Mortgage services to buy property abroad are available from many offshore banks and building societies.

Rates vary depending on the country, but they are likely to be slightly lower by purchasing in Europe and taking out a mortgage through a well-known offshore bank, then they are on a property in the UK.

Some banks will offer mortgages only in euros, although others do also offer them in sterling for people buying in Europe. Anyone who opts for a euro mortgage but is paid in another currency should remember that there is the risk of volatility in the exchange rate.

Anyone who is paid in sterling should try to borrow in sterling. Euro mortgages are really only suitable for those earning euros. David Hollingworth, of mortgage brokers London & Country Mortgages, said: “There can be additional exchange rate risk if borrowers take the mortgage in a different currency from that in which they derive their income.

“For example, if the foreign currency strengthens against the pound then effectively the mortgage and the monthly payments increase even though there has been no change in the interest rate charged. If a foreign lender is used, the mortgage is likely to be in the foreign currency, whereas some of the offshore operations of UK lenders will be able to lend in sterling.”

It is not just currency risk that could cause problems. Legal systems can vary greatly, so it is important to understand the specifics involved. Alison Rolls, of Norwich & Peterborough Building Society, which offers mortgages on properties in southern Spain and Gibraltar, said: “Do be aware that there are significant differences between UK and Spanish land law. In particular, note that contracts to purchase property can become legally binding very quickly, so don’t sign anything before seeking legal advice.

“If you have set your heart on a property because of its wonderful, uninterrupted views, do find out if any development is planned or would be permitted that would ruin your vista.”

Norwich & Peterborough will lend up to 75 per cent of the property valuation in sterling, and the minimum purchase price must be £60,000. Its Spanish home loans include a standard variable rate, currently 6.75 per cent; a tracker mortgage which is the UK bank base rate of 4.75 per cent plus 0.24 per cent in years one and two, followed by the base rate plus 1.25pc per cent in years three to five, followed by the variable rate; a two-year fixed rate at 3.79 per cent; and a five year fixed rate at 5.49 per cent. Application fees start at £375, depending on the valuation and there is a £250 reservation fee.

According to the building society, a typical customer buying in southern Spain pays £196,462, compared to £168,614 a year ago. Borrowing averages 58 per cent of the value of the property and the typical mortgage is £113,184 over 16 years.

Anyone finding it difficult to arrange finance could remortgage their UK property to release equity.

Source: Telegraph