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16 | International Finance
Rate) index of which there are a number of
variations including the Euribor one month,
three month, six month, nine month and 12
HNW International mortgage best buy table
month options. These rates vary slightly, and
will usually determine how often the mortgage
product is revised and how long the initial
Loan amount €1,500,000
rate will be fixed for – unless of course you
have chosen a fixed rate product.
Country Type of Maximum LTV Starting rates Interest Only
mortgage from option available
Interest index
The interest rate you pay will therefore
France Variable 80% 4.95% •
depend on the index that is used by the lender
plus the margin added to that figure. The
Italy Variable 80% 5.53% •
margin remains fixed for the life of the loan
and it is the base rate that moves. Margin
Portugal Variable 80% 5.77% •
ranges vary from country to country but as an
Spain Variable 60% 5.71% •
example, a mortgage product that tracks the
Euribor three month index - 5.345% at the
time of writing - plus a margin of one per
Lower interest rates will be available at different LTVs (loan to values)
cent would give you an interest rate of
6.345%.
*Based on a 20 year term
Additional costs payable when taking out an
overseas mortgage include valuation fees - Information provided by www.internationalprivatefinance.com
charged by the lender - an arrangement fee -
This information should only be used as a guide. All product specifications will depend on
charged by the lender - and the notary’s fee.
the individual’s financial circumstances. The products mentioned here are for non-resident
Unlike here in the UK, where only the deed of
clients, other products will be available for residents. For a personalised mortgage quote
the sale needs to be registered, in the majority
please contact International Private Finance Ltd or submit your information online.
of overseas markets the mortgage deed also
needs to be registered. This therefore increases
Information correct as of 02/10/08.
the legal costs associated with taking out an
overseas mortgage and is one of the key rea- Tax troubles raising finance won’t be possible.
sons why the remortgage market hasn’t devel- One key consideration, particularly for HNW In addition to being able to guide you
oped in the same way as in the UK, and also clients, is the tax implication of purchasing towards the product most suited to your par-
why the costs of remortgaging abroad are so property either using debt or funds raised ticular circumstances, an overseas mortgage
much higher. elsewhere. In many countries there will be tax broker will also be able to explain some of the
A relatively conservative approach to lend- advantages of having debt secured against an quirky details associated with overseas mort-
ing is one of the key reasons why lenders in overseas property asset. A good example of gages that you may not have encountered here
these markets - with the exception of Spain - this is in France, where wealth tax is paid on in the UK. For instance, once you have
have remained relatively unaffected by the net assets with a value in excess of ?770,000. It received your French mortgage offer from the
credit crisis. Some countries – notably France goes without saying that you should always lender, you are legally obliged to keep it for 11
and Portugal - have actually recently improved consult a tax professional when looking at tax days before you are allowed to return the
and extended mortgage terms available to the planning issues, as well as considering your signed offer to the bank. Forward thinking
non-resident market. tax position back in your country of domicile. individuals sometimes post date the applica-
In most overseas markets both interest only With so many options available and the tion form, sign it and return it to the lender.
and repayment mortgages are available. Many added complication of arranging your over- However, all that happens in such an instance
lenders prefer to offer an interest only period seas finance in a foreign language, it is not is that the offer is re-issued and the eleven day
for a limited period rather than for the full surprising that many people use the expertise cooling-off period starts again!
term of the mortgage. Full term interest only of an overseas mortgage broker to arrange this Current turmoil in the financial markets
products, however, are becoming increasingly transaction. has undoubtedly affected overseas property
common. While some overseas lenders employ markets and the confidence of those who are
Equity release and capital raising products English speaking sales staff, an overseas broker considering investing in a second home
are available for individuals who own proper- with bilingual consultants will ensure you abroad. But it has also created some interest-
ties that are either unencumbered or where have access to the widest possible range of ing opportunities and, with the availability of
they are looking to increase the mortgage mortgage products from a comprehensive overseas mortgages still strong and remaining
amount. Lenders will nevertheless generally be panel of lenders offering non-resident mort- relatively unaffected, completing your pur-
keen to understand what the funds are to be gages. chase with an overseas mortgage is becoming
used for. As discussed above, as a general rule, over- an increasingly popular option. For those in
While the largest range of products is cur- seas lenders tend to have fairly tight lending the know, this allows you to minimise your
rently available to purchase property as an criteria. Some favour large loan amounts, currency exposure when purchasing a non-
individual, there are also a variety of products some prefer smaller loans, some offer a range sterling denominated asset. It also gives addi-
available that allow you to purchase an over- of interest only options and likewise some tional peace of mind, as the lender providing
seas property within the name of an offshore only provide repayment mortgages. It can be the mortgage will have carried out legal
company, an SPV or a trust structure. As a very frustrating for clients to be turned down checks to ensure that the property is properly
general rule, these options will be a lot more by one lender because they don’t fit their tar- registered, and that the price agreed is fair in
limited and will vary from country to country. get profile and then mistakenly believe that the current climate.
January 2009 Investment International www.investmentinternational.com
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