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Tuesday 2 November 2010
Overseas Mortgage Broker November Newsletter
IN THIS ISSUE
We have recently been asked: “Is it a good time to buy in Spain?” 
Wednesday 18 August 2010
Drawing a line in the sand
As with any overseas property market there are often hurdles along the way that prevent it from reaching its full potential. Typically mortgage finance is one of those hurdles and moves are afoot to allow the Egyptian property market to overcome this hurdle and realise its true potential.
Mortgages are available in Egypt however they are difficult to obtain. This is mainly to do with lack of awareness of their availability and prior to the credit crunch, lack of demand. The majority of properties are currently sold as cash purchases or via short term payment plans offered by the developer. These short term payment plans are typically over 2-3 years. However in this post credit crunch world, clients are looking for longer payment terms and are looking to borrow to purchase their property and use a smaller deposit so as not to tie up all of their money.
One of the major sticking points to getting a mortgage in Egypt hinges on whether the property is registered or eligible to be registered with the Land Registry. The legal process to acquire permission to build a property and officially acquire the title deed to the land on which the property is to be built, has in the past, required 77 bureaucratic procedures at 31 different agencies and could take anywhere between 6 and 11 years. This has resulted in only 10% of properties in Egypt being officially registered. This process is further complicated on properties that are on the Sinai peninsula as this land is leasehold land (Usufruct) and has its own set of restrictions. However the Ministry of Housing in Egypt realise that to increase buyer confidence and increase residential tourism numbers, this process has to be speeded up so that buyers will have proof of title over the property they have bought and in turn this will increase the appeal to foreign investors.
To register the property the developer must be able to provide a copy of the registered contract (Registered and Accepted by the Registration Office or ready to be registered), a copy of the construction license and confirmation that the taxes on the property have been paid. Before any of this can happen the developer must have got their development approved for mortgage finance by a bank. In the majority of cases where a client requires a mortgage to complete their purchase it’s highly likely that they will not be able to obtain a mortgage, as the development hasn’t been approved for mortgage finance.
So to meet the demands of the client, the developers will need to adopt new business practices. Overseas Mortgage Broker (OMB) are currently working to provide developers with a one stop shop for getting their developments through the due diligence and approved for mortgage finance and thus making their property offering more attractive to clients who require finance to purchase. By getting the development signed off by more than one bank this will widen the range of mortgage products available to the client. This will also give developers a competitive advantage because as a development passes the banks due diligence then it adds a further level of kudos and security to the buyer as well as increasing the number of clients that can now hope to purchase.
Working with the Egyptian banking community, OMB will look to increase awareness and provide clients with greater access to funding and a wider choice of products. This in turn will provide competition within the mortgage market there.
Qualifying for a mortgage
When a development is eligible for mortgage finance then Egyptian lenders will require proof of income via payslips or tax returns and the clients monthly debt payments including the new mortgage must not exceed 40% of the client’s net monthly income. Mortgages can be taken in a choice of currencies including US Dollars, Sterling, Euros and Egyptian Pounds. Loan to values are typically 60% to 65% and are available up to 80%, again dependent upon which bank has approved the development. Clients should have a clean credit record. Very few lenders will lend on off plan property unless it is one of their own bank backed developments with the majority of lends either happy to lend on a property that has the outer shell prior to the final fittings or on the finished property. Again if a prospective client can see that mortgages will be available upon completion and based on their current circumstances that they would qualify for a mortgage then this can hopefully overcome that particular sales objection.
The way forward
Change is coming to the Egyptian property market and a line in the sand is about to be crossed which will be beneficial to all parties with a vested interest in the property market of such a beautiful and historic country. This change will need to be industry lead by the Egyptian government, developers, banks and OMB, which by working together can ensure that the Egyptian property industry sets high standards and provides clients with piece of mind when buying property.
For developers this means getting their developments approved for finance and eligible to be registered. For clients this will mean a safer buying process. They should get independent legal advice and ensure any contracts are checked over thoroughly before committing to buy. They should satisfy themselves that the development will be eligible to be registered and eligible for a mortgage.
They can then sit back, relax and soak up the sun.
For further information in getting your development approved for mortgage finance then contact Kevin Macadam on +44 1482 641397 or via email kevin@overseasmortgagebroker.co.uk
or visist us at : www.overseasmortgagebroker.co.uk
Mortgages are available in Egypt however they are difficult to obtain. This is mainly to do with lack of awareness of their availability and prior to the credit crunch, lack of demand. The majority of properties are currently sold as cash purchases or via short term payment plans offered by the developer. These short term payment plans are typically over 2-3 years. However in this post credit crunch world, clients are looking for longer payment terms and are looking to borrow to purchase their property and use a smaller deposit so as not to tie up all of their money.
One of the major sticking points to getting a mortgage in Egypt hinges on whether the property is registered or eligible to be registered with the Land Registry. The legal process to acquire permission to build a property and officially acquire the title deed to the land on which the property is to be built, has in the past, required 77 bureaucratic procedures at 31 different agencies and could take anywhere between 6 and 11 years. This has resulted in only 10% of properties in Egypt being officially registered. This process is further complicated on properties that are on the Sinai peninsula as this land is leasehold land (Usufruct) and has its own set of restrictions. However the Ministry of Housing in Egypt realise that to increase buyer confidence and increase residential tourism numbers, this process has to be speeded up so that buyers will have proof of title over the property they have bought and in turn this will increase the appeal to foreign investors.
To register the property the developer must be able to provide a copy of the registered contract (Registered and Accepted by the Registration Office or ready to be registered), a copy of the construction license and confirmation that the taxes on the property have been paid. Before any of this can happen the developer must have got their development approved for mortgage finance by a bank. In the majority of cases where a client requires a mortgage to complete their purchase it’s highly likely that they will not be able to obtain a mortgage, as the development hasn’t been approved for mortgage finance.
So to meet the demands of the client, the developers will need to adopt new business practices. Overseas Mortgage Broker (OMB) are currently working to provide developers with a one stop shop for getting their developments through the due diligence and approved for mortgage finance and thus making their property offering more attractive to clients who require finance to purchase. By getting the development signed off by more than one bank this will widen the range of mortgage products available to the client. This will also give developers a competitive advantage because as a development passes the banks due diligence then it adds a further level of kudos and security to the buyer as well as increasing the number of clients that can now hope to purchase.
Working with the Egyptian banking community, OMB will look to increase awareness and provide clients with greater access to funding and a wider choice of products. This in turn will provide competition within the mortgage market there.
Qualifying for a mortgage
When a development is eligible for mortgage finance then Egyptian lenders will require proof of income via payslips or tax returns and the clients monthly debt payments including the new mortgage must not exceed 40% of the client’s net monthly income. Mortgages can be taken in a choice of currencies including US Dollars, Sterling, Euros and Egyptian Pounds. Loan to values are typically 60% to 65% and are available up to 80%, again dependent upon which bank has approved the development. Clients should have a clean credit record. Very few lenders will lend on off plan property unless it is one of their own bank backed developments with the majority of lends either happy to lend on a property that has the outer shell prior to the final fittings or on the finished property. Again if a prospective client can see that mortgages will be available upon completion and based on their current circumstances that they would qualify for a mortgage then this can hopefully overcome that particular sales objection.
The way forward
Change is coming to the Egyptian property market and a line in the sand is about to be crossed which will be beneficial to all parties with a vested interest in the property market of such a beautiful and historic country. This change will need to be industry lead by the Egyptian government, developers, banks and OMB, which by working together can ensure that the Egyptian property industry sets high standards and provides clients with piece of mind when buying property.
For developers this means getting their developments approved for finance and eligible to be registered. For clients this will mean a safer buying process. They should get independent legal advice and ensure any contracts are checked over thoroughly before committing to buy. They should satisfy themselves that the development will be eligible to be registered and eligible for a mortgage.
They can then sit back, relax and soak up the sun.
For further information in getting your development approved for mortgage finance then contact Kevin Macadam on +44 1482 641397 or via email kevin@overseasmortgagebroker.co.uk
or visist us at : www.overseasmortgagebroker.co.uk
Tuesday 17 August 2010
Welcome!
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 $72,000 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
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 $72,000 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
Thursday 25 June 2009
Overseas Mortgage Broker
Successfully Financing Your Overseas Property Purchase
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!
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!
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