UK Mortgages For Expats

British professionals are highly respected around the world for their knowledge and skills in various industries. Many work abroad for a while before returning home with some establishing permanent residency in their chosen country. Most still maintain connections with their roots through people and property. They might choose to invest their savings on UK mortgages for expats in preparation for retirement and so on. This can be challenging due to the distance and the complex laws that govern such transactions. It is often wise to seek the help of specialists who can simplify the process. Below are a few of the most common cases that would benefit from their assistance:

Purchase a Residential Property

Everyone dreams of having a home that they can call their own. This is getting harder every year with property prices rising. With a good job abroad, expats have a better chance of finally making their dream come true. Mortgage specialists can help by finding excellent deals on the market based on their client’s preferences. They will make site visits and perform thorough inspections. They can also smoothen out the process by taking care of the paperwork behind the scenes. There is no need to go back and forth frequently just to get things done so you can focus on your job with confidence.

Obtain a Buy-to-Let Mortgage

While the purchase of a home for personal residence is great for those planning a return, those who are thinking of staying longer in their current country of residence have several options as well. This includes getting a buy-to-let mortgage. The property can then generate passive income while the owner works on the other side of the world. This is an attractive proposition for many as it assures them that they have a title to their name back home that they can always use but, in the meantime, they can allow others to live in them for a fee indefinitely.

Remortgage for Savings

Some people have already taken a mortgage before going abroad. These are, by nature, long-term contracts with definite terms. A lot of things can happen in a span of a few years and what seemed like reasonable schemes in the past may seem to be less than ideal in light of the current situation. For instance, it may be possible to get a lower interest today and thus save a great deal of money. Expats can opt to remortgage for substantial savings. However, one must remember that the process entails additional costs that could offset the projected savings. Study things well to see if it will still be beneficial overall.

What Is A Cash-out Mortgage Refinance?

A cash-out mortgage refinance refers to a refinancing arrangement where one borrows more than their current loan. They get the difference between the two amounts in cash. This is usually done in order to turn some of the equity accumulated on the home into cash.

Cost

A cash-out refinance is similar to a conventional one in that the borrower has to foot the closing costs. These could amount to hundreds or even thousands of dollars. One also has to pay interest on the cash they get out in addition to the mortgage amount. Again, this could add up to thousands of dollars over the loan’s lifetime.

What’s the Cash Used for?

Typically, the cash can be channeled into any use that the borrower prefers. This could range from settling a credit card debt to going on holiday. In practice, some uses of this cash are more prudent when compared to others.

If one has a high interest debt, such as credit cards, it would make sense using a cash-out refinance to pay off this amount. All costs need to be taken into account before taking this option. This is because in most cases, interest payable for credit cards usually exceeds that of the new loan considerably.

In doing this, other benefits can be realized. The borrower could boost their credit score by paying out the maxed-out credit cards. There’s also a benefit that applies in shifting the credit card debt to a home loan because the interest can be deducted from taxes.

finance35005This money could also be channeled towards home improvements, which could boost its value in the long run. One however needs to be aware of the risks involved. If the new loan isn’t repaid, one could end up losing their house.

Restrictions of Such a Refinance

Most lenders won’t consider borrowers in certain financial situations for a cash-out refinance. Some of these include having a minimum credit score (this is usually higher than that of a conventional refinance). People who’ve owned their houses for at least one year and have a loan-to-value ratio of not more than 85%. The loan-to-value ratio is the total borrowed amount divided by the home’s appraised value.

Other Alternatives

Due to the costs that come with such an arrangement, one could consider other options such as a home equity line of credit or a home equity loan. Unlike a cash-out arrangement, these are taken out separately from the loan one already has. Under a home equity line of credit, the house is used as collateral. One could withdraw money from the line of credit whenever necessary, up to a specific amount. The interest rate is usually adjustable.
A home equity loan is a separate loan on top of the existing one where the money is given as a lump sum. Again, the house is used as collateral. The interest rates are usually fixed.

To pick the best option, one needs to consider their needs. If the money is needed in a lump sum, a home equity loan would work. Other vital considerations include fees, total interest payable and closing costs. Though cash-out refinances have lower interest rates than the two alternatives, the closing costs tend to be higher. In addition, they also reset the term of the loan, so one ends up paying more interest in the long run.

A cash-out mortgage refinance would be worth pursuing if one can get a good interest rate and knows how they can quickly repay the loan. If there are any concerns about repayment, then it wouldn’t be worth it. One could consult a financial expert on the best course of action to take.

Bay Area Mortgage Rates Depend On A Variety Of Factors

First-time home buyers normally do a lot of research to learn about factors affecting Bay Area mortgage rates. This knowledge enables them to identify the most suitable time to buy a house as well as the best mortgage lender. While some people get their information from mortgage advisers at their banks, others trust private mortgage advisers more. There are also those who do their own research to get as much information as possible before approaching a mortgage broker or lender for mortgage pre-qualification. The following are factors affecting mortgage rates in California’s Bay Area.

i) Credit Scores

Your credit score is a measure of your financial competence or trustworthiness. A high score shows that you are financially responsible and trustworthy. It is basically a reflection of your ability to service a credit facility without default. If you have a poor credit score, either due to missed credit card payments, bankruptcy or foreclosure, you can expect lenders to quote high mortgage interest rates. For this reason, you may want to check your credit report for errors and have them rectified. If there are no errors, consider taking your time to rebuild your credit before applying for a mortgage to ensure you get an affordable mortgage.

ii) Type of Mortgage

There are special home loans for certain groups of consumers, such as veterans, active military personnel, first-time home buyers and low income households among others. The government has special programs to ensure these special groups are properly housed in an affordable manner. These special home loans usually come with low interest rates and zero, or low, downpayment requirement. Be sure to research extensively and consult experts to find out if you qualify for a special type of home loan because the type of loan you apply for will significantly affect the interest rate you pay.

iii) Inflation

mortgage35001The rate of interest charged on home loans is also affected by the prevailing rate of inflation. However, only adjustable rate mortgages (ARMs) can be affected by inflation. If you apply for an adjustable rate mortgage, which is adjusted annually for inflation, the mortgage rate you pay will fluctuate from year to year depending on economic conditions. A rise in inflation will lead to an increase in interest rates and vice versa. If you would like to pay a fixed rate of interest on your home loan, consider getting a fixed rate mortgage at a time when interest rates are low.

iv) Government Policy

There are times when the government may lower the base or prime lending rate to stimulate economic growth by enticing potential buyers to apply for mortgages and buy homes, which will in-turn create a demand for new homes, construction services and construction jobs among other things in the economy. If the government adopts this policy, the interest rate on a typical mortgage will reduce significantly, whether its a fixed rate mortgage or adjustable rate mortgage.

v) Type of Lender

Your choice of lending company will affect the rate you’ll pay on your mortgage. Ideally, you should take your time to compare mortgage companies. Consider consulting a mortgage adviser to advise you accordingly. Be sure to also use online resources, such as websites which compare mortgages in the area. Lenders have different profit appetites and overhead costs, which may affect the mortgage rate they quote, so take your time to find the right lender.

The best time to apply for a mortgage, therefore, is when all the “stars” are “aligned”. Start by building or maintaining a high credit score while searching for the right lender. Identify the right mortgage type as you wait for lenders to quote the lowest rates possible before applying for a home loan.