BiggerPockets

Overseas Mortgage Blog

Tuesday, September 28

Welcome to our new regular overseas mortgage column where we hope to be able to address any questions you may have regarding finance for your clients and bring you the latest overseas mortgage news.

In our first column we look at the importance of qualifying your client for finance and handling objections.

At the start of the boom in overseas property sales in the year 2000, 80 per cent of clients financed their overseas property acquisitions from their own wealth. But research by Savills shows that by the market's peak in 2007, the number of cash buyers had dwindled to just 20 per cent, with 80 per cent of buyers taking advantage of liquidity in foreign mortgage markets.

Therefore, “How do you propose to finance your property purchase?”, should be one of the first questions your sales staff asks a client. The sooner you qualify your client, the sooner you know you are dealing with a serious buyer and not somebody that could be wasting your time.

One of the key points in any sales process is overcoming objections. There are various finance objections a client can make which can prevent a sale from progressing. Here are some common objections and some ideas on how to handle them.

Im selling my house. If your house doesn’t sell quickly how long are you prepared to put your life on hold? Had you considered the benefits of letting your UK property? Our financial advisors will discuss how you can make the move abroad before you’ve sold your home by releasing equity from your property and also discuss the pros and cons of letting your existing property.

I don’t own a property. Can I get a mortgage? Yes you can get an overseas mortgage providing you have a sufficient deposit and can prove your income.

Im self employed can I get a mortgage? Yes providing you can prove your income.

My bank said no so why would anyone else lend me the money? Every lender has a different set of criteria for each client. Your bank can only offer its own products whereas our advisors research the whole market to find a lender that meets your needs. They have a strong relationship with lenders and underwriters who will judge each case on its merits.

My existing mortgage deal has penalties if I move away. How can you help? Our advisors can discuss the options of a further advance with your existing lender or a secured loan.

Surely going straight to a high street bank would be better and cheaper? Our advisors provide independent advice researching the whole of the mortgage market ensuring you get the best deals.

I have had credit problems. Can I get a mortgage? Yes there are lenders that will lend to clients who have had problems with their credit.

How quickly can I arrange the finance? Our advisors will discuss your requirements over the phone and will then confirm everything in writing. Once you are happy to proceed then they submit most of the applications online which means that on average your funds are available in four to six weeks.

I intend to do the research for finance myself. Are you qualified to? Products change on a daily basis and therefore our advisors will have details of new products. Some deals are only available through intermediaries.

What will it cost me? Our advisors will always look to obtain the best rate with the lowest fees depending upon your requirements and circumstances. Before you agree to proceed you will be able to make an informed decision based upon written details of the proposed deal.

Hopefully that gives you a flavour of how those objections can be overcome when you link up with an overseas mortgage specialist.

Latest mortgage news

Overseas Mortgage Broker have recently launched a USA arm of the company that can source mortgages on properties worth over $145,000 for foreign national clients at rates starting at 3.7%.

We are currently in discussions with a Spanish lender who is looking to allow equity release with no requirement that the money is spent on home improvements.

We are helping developers in Egypt provide mortgage finance to their clients and get their developments approved for mortgage finance.

We now have in place a feedback reporting system so that agents and developers who refer their clients to us know what is happening with their cases on a regular basis.

We ensure that every client referred to us is contacted the same day and given the basics of how an overseas mortgage works and an idea of whether they will qualify.

Is your current finance provider going the extra mile for you and your clients? If not then get in contact and we can see if we can help you achieve more sales.

Visit us at: www.overseasmortgagebroker.co.uk

Successfully Financing Your Overseas Property Purchase

Friday, June 26

Welcome to our first Blog!

Over the coming months we hope to give you an insight into how overseas banks make their lending decisions, how you can improve your chances of your application being successful, who’s lending and where.

Behind all of the hype and scare mongering surrounding the credit crunch, the most important elements of borrowing remain the same. If you keep an open mind, get good experienced help and you take advantage of what’s available you’ll be in good shape.

When should you get advice?

• Do it early as starting point to the buying process.

It never ceases to amaze me the amount of clients who approach us for finance after they’ve signed to purchase a property. Swept away by sales patter or approached whilst they are on holiday, they fall in love with the idea and agree to the purchase.

Most of us wouldn’t dream of buying our main home without first getting it properly valued, checking if we can get a mortgage and allowing a solicitor to check over the legal documents. However it would seem that when it comes to buying a property overseas some of us seem to forget to do these things.

Clients are then disappointed when we tell them they don’t qualify for an overseas mortgage. If you arrange the finance first then you’ll end up with piece of mind that a property is in your budget, that you qualify for a mortgage and you may find that you can actually afford a better property than what you originally thought you could obtain.


So how do overseas lenders calculate what you can borrow?

Overseas lenders calculate what you can borrow based upon affordability. Each lender has its own set of terms but in general they all work to similar guidelines.

These guidelines hinge in the main on two questions

• Can the client prove their income?
• What is the client’s debt to income ratio (DTI)?

If they cannot prove their income then the mortgage will be declined. Even when overseas banks were keen to lend they still didn’t embrace self certified mortgages. This is probably why a number of them have weathered the credit crunch better than their Irish and British counterparts. Proof of income if employed will be via payslips and end of year tax figures and if you are self employed then by providing two years accounts.

Most lenders work on what they call a debt to income ratio. This ratio differs from country to country and from lender to lender.

For example, a client who has net income per month of 4000 euros may want to buy a property in Dubai. The lender may have a DTI of 35%. Therefore 1400 euros has to cover the clients new Dubai mortgage payment plus his existing personal debt.

Let’s say he has an Irish mortgage payment of 500 euros, a monthly credit card bill of 100 euros and his new Dubai mortgage will be 700 euros, then in this instance he would be approved by the Dubai Bank.

However if his Irish monthly debt payments were 1000 euros then this would exceed this ratio because the total would be 1700 euros and the lender would decline the case.
So “How do I propose to finance my overseas property purchase?” should be the first question you should ask yourself before signing anything.

Armed with that little bit of information you already have an idea as to how you will be viewed by an overseas bank and how successful your mortgage application is likely to be.

Don’t get caught out like a client who was referred to us by an Independent Financial Advisor.

She had spent £430,000 on two properties and had remortgaged their UK property to the hilt and ploughed all their savings into the two apartments and still needed £60,000 to complete their purchase. After discussing her situation we had to inform her that she failed the lenders DTI ratio and wouldn’t qualify for a mortgage. To add insult to injury we had to break the news to her that the property wasn’t on an approved development list for finance and therefore a mortgage wasn’t available even if she had of qualified.

The client had spoken to a UK based solicitor who didn’t even specialise in UK conveyancing let alone overseas and he’d told her that there were no problems purchasing in Dubai or arranging a mortgage. The problems lie in the fact that full legal title to land as well as property isn’t straightforward in Dubai. For a Dubai property to qualify for a mortgage it has to be on a list of approved developments. If it is not on the list then the client is not able to raise a mortgage on the property and will have to raise the balance from other assets or pay cash. If they cannot do this then they are unable to complete their purchase.

We get many calls from potential clients looking for Dubai mortgages as their properties near completion and they need to raise mortgage finance to enable to complete on the property. These clients were told by the company selling them the property that the mortgage and legal title would be sorted at the time of completion. What these clients are now finding is that this isn’t the case.

Finally, if you are relying on a Dubai mortgage to complete the deal, speak to an overseas mortgage specialist who can check the list of approved developments and arrange any finance for you.

If you would like to suggest a topic for our next article or you have a question you would like to pose to us or if you would like to contact us to discuss your individual requirements then please contact us at kevin@overseasmortgagebroker.co.uk or vince@overseasmortgagebroker.co.uk

Happy property hunting!