Loan Application Checklist

For many buyers, applying for the mortgage loan is one of the more stressful aspects of buying a home. The loan application need not be a stressful time. By following a few easy steps, you'll sail through the loan application process.

Mortgages – Financing the project

If you require finance, either by a UK or US mortgage, you may have already obtained an agreement in principal from your chosen lender or indeed you may already have the money waiting in the bank. If not, these notes may help you to choose the best way forward.

There are several methods of raising finance to buy your investment property.

1.     Capital raising on your UK property.

UK lenders are sometimes prepared to advance up to 95% in some circumstances, of the value of your existing UK property to fund a foreign purchase. For example, if your UK home is worth £200,000 and you have an existing mortgage of £90,000. Some lenders will advance a further £100,000 to take your total borrowing to £190,000, or 95% of the property value. The £100,000 raised ( currently ) equates to approximately $180,000 and this can be used to pay partially or wholly for the new home in Florida.

2.     Entering into a new UK mortgage for the purchase of the US home.

Some specialised UK lenders will advance up to 70% of the cost of the US home, on the basis that the rental income should cover the cost of the borrowing. You will have to find a deposit of 30%, plus you will need to cover the closing costs. This is a relatively new market in the UK and our experience to date is that the process can be slow and fraught with hurdles, compared to similar borrowing in the US, but it is getting better.

3.     Working with a professional Mortgage Brokers here in Florida.

We have many professional contacts, including mortgage brokers and if appropriate, we will introduce you to one of them here in Florida. Typical loans are based on either 70% or 75% advances for foreign nationals. Because lenders here are so familiar with UK clients borrowing for investment purposes, they are inclined to lend on the basis of “no questions asked”. Effectively what this means is that provided you are contributing 30% or more of the agreed price as you deposit, they will advance the balance with a minimum of fuss. They will simply need a statement from you confirming who you are and where you live and what you do for a living. You will NOT need to produce salary statements, etc.

If you are looking for them to advance 75% of the purchase price, they may also need a letter of introduction from your UK bank, as covered already.

You can also apply for a US foreign national loan with a deposit of only 20%. In this situation you will probably need to disclose all your UK finances, including salary, investments, and liabilities. If you wish to take advantage of this type of programme, please bring as much relevant information as you can with you. You will certainly need your passports, driving licences, and some evidence of earnings. Please also bring with you a letter of introduction from your UK bank.

( see the page "opening a US bank account" )

US mortgages are typically written over a term of 30 years, irrespective of your age. At the time of updating these notes, in November 2005, the lending rate for foreign national mortgages was around 6%. Loans are often offered at a rate fixed for 3, 5 or 7 years. Some loans are fixed for the full term. There is also the option to pay interest only. The mortgage broker will detail all these options for you and provide a written estimate of all costs.

Which method is best?

It is possible to raise the capital for the purchase with a combination of the above, e.g., raising the deposit on your existing home and obtaining a mortgage for the balance, however, we would stress the need to ensure that you do not overburden yourself and exceed your ability to re-pay.

If you obtain your funding in the UK, the lender will normally provide written evidence of your approval and limitations, which you should bring with you. This will identify you as a genuine buyer and may improve your ability to negotiate, as you will, in effect, become a cash purchaser.

To find out if using a US broker is best for you, first of all, we'll intoduce you a professional mortgage broker who will take the time to explain the mortgage process in the USA, guiding you through each step, in language you will understand. The broker we use will be experienced in dealing with British buyers - you will be in safe hands and we will be there with you, too, every step of the way.

We will often introduce you to the broker by email, long before you travel to the USA and this way, you can build a relationship and begin to understand the various programmes and be aware of costs, long before you set foot in Florida and start to look at property.

That way, there will be no hidden surprises when you arrive and meet your broker face to face.

Here are a few suggestions that will help your first meeting with the broker more meaningful.