Thursday, 29 March 2012

Mortgage in UK

mortgage uk
English law does not affect the acquisition of real estate by foreigners. Non-residents have the same rights as the British themselves. Moreover, foreign buyers are exempt from inheritance tax and capital gains, which is for local residents is 40%. The size of the mortgage loan to residents who buy real estate in England, can reach up to 85% of the total project cost.

Non-residents can go and see from abroad in the possession of the ordinary visitor's visa. The fact is that, unlike other European countries, the availability of real estate in the property does not give foreigners the right to receive any British citizenship or the registration of permanent residence.

I must say that there are several types of long-term loan - residential) investment and commercial mortgages. Their names speak for themselves. Residential mortgage, is primarily intended for those planning to acquire housing for personal use. A common requirement is the presence of the creditors of a temporary or permanent resident status. For those who have lived in the UK for three years, it is desirable to show evidence that the status under which they live in the country will still be valid for at least a year. Those who are in less than three years, but longer than one year, shall have standing to reside in the country during the next at least two and a half years.

Deposit that you make when buying a home, using the residential loan, usually from five to fifteen percent of the value of the property. Of course, the larger the deposit you are willing to pay, the easier it is to convince the lender to give you credit. But the reality is that only a very small percentage of buyers able or willing to cover most of the lump sum value of the property. Usually prefer to stretch the payments over an extended period, normally 25 years. The loan amount is always dependent on income credited, and depending on that particular lender offers, you can get an amount equal to your total return over three to five years. Thus, if the income is credited not great, in theory, he can not get a big loan allows you to purchase a house, at a cost higher than what he himself could actually afford.

Investment mortgage can benefit those who do not reside in the UK, but is willing to invest capital in real estate, as well as those who already live in this country, but wants to purchase a house for the purpose of renting (Buy to Let). The deposit amount in this case is typically 15% of property value. The decision to grant mortgage lender and determining its size depends entirely on other criteria. There are significant income is not credited, but the revenue that will be purchased to bring home in case of giving it out. Commercial mortgage is used in the commercial real estate transactions. When you decide to get a mortgage, you should be prepared for additional costs. These costs must be provided in advance as they usually are not covered by the resulting mortgage amount and you should reserve these funds along with a deposit, but separate from it.

What does the present of these costs?
It is, first of all, the costs associated with the work of a lawyer. Each real estate transaction is made by lawyers. The cost of an attorney is usually 0.5% of the cost of your purchase. The second component of the cost - is to assess the condition of the property. The cost is usually calculated from 350 pounds for a basic evaluation and increases depending on the details of the analysis and the state of the object. Such an estimate is a strict requirement of any lender.

The following flow - a re-ownership of real estate. Ownership of the property is registered in HM Land Registry. To register you have to pay a special tax, the so-called Stamp Duty, which depends on the value of the property:
  • 0 to 60,000£
  • 1% - 60.001£ - 250,000£
  • 3% - 250.001£ - 500,000£
  • 4% - 500.001£ and up
There may be other costs such as administrative, levied by the broker for the processing of your application form. This fee may be around 300 pounds, and usually, if the application form is rejected by the creditor, returns applicat.

Methods of loan repayment.

loan repayment


Repayment Mortgage
Repayment Mortgage, also known as Capital and Interest, is that after a period of credit taken by the lender you return him the amount together with accrued interest (interest). Thus, your monthly payments consist of two components - the return of capital (Capital) and interest on capital employed (Interest). In the early years of the interest component, paid as a return to the lender, is always greater than the capital component, but the more you return, the amount you have not paid capital, which actually accrued interest, is reduced. Thus, by the end of the crediting period, the monthly payments are a growing component of the capital and a lower percentage.

Assume that the loan amount granted for 25 years, 120,000 pounds. By the end of the year you paid the creditor, as the order of 5.400 percent, and only 2.100 of the amount of the loan. At last the same in '25, the amount paid as interest on the loan will be reduced to 500 pounds, and the sum of the return of capital will increase to 9,000. The main advantage of this method of repayment is that by the end of the loan period you completely extinguish, as the amount of the loan and interest owed to the lender and will be the rightful owner of his property.

Interest Only
With Interest Only Mortgage monthly payments represent only the interest component, that is, you pay only the interest. In agreement with the lender stipulates that the amount involved will be paid a lump sum at the end of loan period. Thus, along with monthly interest payments to the borrower should take some additional financial investment mechanism that will allow him to accumulate by the end of this period, an amount equal to the amount of the loan. Of course, there is always an opportunity to sell the property and repay the loan without additional investment, but this option would be more like a long-term lease, after which you will always remain with nothing.

Mortgage registration procedure
Once you have selected the type of mortgage, the mortgage program and the Bank, you can apply for mortgage with all necessary documents required by this bank. The decision to grant you a mortgage will take a few days. If the bank finds that it lacks any documentation, or any questions they are asked to provide them. If the will be approved, you pay the cost of the mortgage - and the appraiser's fee. Then, the appraiser of the bank makes an inspection of your property for its market price and the price that you have a lending bank and sends the inspection report. A copy of this report is not sent to you, and you are unlikely to see it. If appraiser gave the bank, the bank send you a letter offering to give you the mortgage. After that on the basis of this letter, You can sign a contract to purchase real estate. Then send a signed contract to the bank and the bank transfers the money but not for you and but your notary. So happy mortgage!

Required documents
  • Depending on the bank, may be requested any documents at their discretion.
  • Bank mortgage application form
  • The borrower's passport
  • Proof of current address of the borrower (for example: any utility bill for the last three months at the time of filing)
  • Tax form for the last three years
  • Bank statement detailing the revenue and payments for the last six months)
  • Employer letter confirming your salary, bonuses, dividends
  • List of assets and liabilities,certified by an independent accountant or auditor)
  • Any other financial documents to prove your ability to pay


The registration cost of the mortgage
  • Mortgage Broker: from 0.5% to 1% of the loan amount
  • Bank Surveyor 200£ - 750£ depending on the size of loans and location
  • Administrative bank fee 200£ - 750£ depending on the size of the loan and the Bank

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