Posted in:
Overseas Mortgages,
News
By Mark Nichols
Jul 11, 2008 - 10:48:38 AM
Arranging finance for non residents in overseas countries has never been the easiest of tasks. The market place has very little of the flexibility enjoyed in the UK mortgage market place. The UK Mortgage advisor has a huge range of lenders with a vast variety of different lending criteria at their finger tips. Buy to lets, self cert, 100%+ LTV, high income multiples, sub prime products and combinations of them all. The overseas market has a very limited product range generally all prime and only a few self cert products and no buy to let products with maximum loan to values 70% to 85%. The ripple effect of the credit crunch in the US has washed across the shores of the UK, we have seen some specialist lenders go out of business over the last few weeks and even giants in the industry like the Northern Rock have felt the effects. The vast range of product’s in the UK are still available (for the time being at least) although we have seen many product changes and a tightening up of lending criteria from a number of the countries leading lenders and rumours are rife more lenders will go out of business. The credit crunch crisis is also washing across other shores too, the overseas market place for non residents may have been more cautious with it products and lending criteria but it does not mean it is escaping the effects. The effects on the global credit market place makes lenders more cautious and this is true for people buying properties overseas the lenders are looking to reduce their risks even further so finding mortgages to fit will become more difficult. We have already seen in the last 6 weeks or so GE Money Home Lending UK close their British Mortgages Abroad division in the US who supplied Sterling mortgages in Florida. In Spain the Self Cert product available has had it maximum lending limits reduced in an effort to reduce exposure, in addition to the reduction in maximum loan the amount of funds available in a month now has a limit on it, once the funds for that month are used up that’s it. We have seen some lenders change their policy from lending nationally to non resident to only lending locally. According to the Cypriot paper the Financial Mirror the National Bank of Cyprus has sent a directive to the lenders to reduce the LTV’s available from 70% to 60% for non residents. New market places like Turkey and Morocco are seeing a more cautious approach to lending with lower loan to values available and shorter term’s to repayment and no interest only options. The lenders overseas who offer loans to non residents have always been more cautious of their lending policies, they have needed to be, if the borrow defaults in many cases it is difficult for the lender to chase the borrower for any shortfall, the lenders only option is to repossess the property and sell it and in a lot of cases the properties which appeal to the overseas investor does not fit well for resale in the domestic market making the property more difficult to sell on and the lender to recover their losses. Although the credit crunch has not taken a strangle hold on the overseas investor market it has had it effects, long term if the pressure remains in the domestic market of the UK and US then it will increase the changes for the overseas purchases with mortgage products becoming more difficult to obtain and ultimately could have an effect on purchase prices of property in a number of the overseas hot spots as the developers find it more difficult to sell the properties as their buyers find it more difficult to obtain finance.
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