Mortgage in the UK is gaining momentum.
For many Russians, who know that the purchase of an apartment or house in the UK is possible in a mortgage, that becomes a revelation, causing genuine surprise.
Indeed, to obtain mortgage lending citizen of Russia is not easy, even at home. But even more surprising to people far from the world’s financial problems, causing the size of mortgage interest rates when obtaining a mortgage loan individuals buying residential property in the UK. This is approximately 4.5% – 5.5% per year for non-residents (i.e. persons who are not citizens of the United Kingdom).
The mortgage interest rate may be floating, that is tied to the refinancing rate of the Bank of the United Kingdom, about: Bank rate + 1-3% . The rate may be fixed – that is, it will be a constant throughout the term of the contract.For residents rate is usually less.
If you compare interest rates when mortgage agreement in Russia with Russian banks, it will be about 13%-15% percent. The difference is really significant. Actually there is nothing surprising. The term “mortgage” originates in ancient Greece and means that the mortgage property is collateral.
In the UK, USA and Australia to refer to the mortgage uses the word “mortgage”. Curious fact. The word comes from French law and means “death contract”. The fact of granting of mortgage lending UK banks foreign persons buying property in the UK easy to explain. Indeed, in case you lose your solvency, the Bank will always remain in pledge your property that can be sold, covering your debt to the Bank. In addition, the government of the United Kingdom has always strived to create a favorable investment climate, creating a complex of measures to attract foreign investors. Mortgage lending to, and investing in a new property located in the territory of England.
What you need to know to get a mortgage for the purchase of residential property in the UK:
1. You can count on a mortgage in the UKif you are a nonresident, only if you have not less than 40 % of the funds for the down payment.
2. You should include the additional costs associated with registration of a loan agreement, valuation of real estate by an independent appraiser, the lawyer’s fee and broker fee.
3. To assess the likelihood of obtaining your loan, you will need to verify annual income, roughly equal to the amount in 3-4 times lesser than the entire amount of the loan. For example, for the loan of £ 100000, you need to confirm the annual income of £ 30000.
What documents will need to provide:
1. Confirmation of your permanent residence. In the UK there is no concept of “register”. To confirm your accommodation will take account of payment of utilities for the last three months.
2. A document confirming your income. This can be a tax return, proof of employment with proof of income required to provide a statement from your Bank account for the last 6 months to reflect in her account.
3. Also, to confirm your income, you may have the report of the independent audit company about your financial condition. The report can be a company included in the list of the largest international accounting firms and has a representative office in Russia. Usually the Bank itself recommends you the name of this reputable company that is trust Bank.
4. You must prove availability of funds for the payment of an initial payment – usually it is enough a statement from the Bank indicating the account balance.
It should also be noted that in the UK you can get a mortgage loan on two conditions:
1. Repayment mortgage – in this case, it is necessary to pay monthly as the sum of the principal debt and interest. However, the amount of the principal debt and interest thereon is gradually reduced.
2. Interest-only-mortgage – in this case monthly paid only the interest, the sum of main debt – capital – remains unchanged. The principal amount is paid in a lump sum after the expiry of the mortgage, or the property is sold.
There is also the concept of “buy to let mortgage“in the case, when you acquire residential real estate mortgage-commercial purposes – that is, in order to obtain rental income. With the right calculation and right choice of investment object, your monthly payments on the mortgage agreement will not only be covered by lease payments, but you will get a small monthly income.
Our specialists will help you understand on what conditions it is preferable to obtain a mortgage to purchase property in the UK, will advise on issues related to the preparation of documents for obtaining a loan. And in case you intend to purchase a property in London commercial property is for rent, we can help you find the most attractive for investment property.
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