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  #1  
Old 06.01.2010, 15:20
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Buying a house in the UK

Hi Guys

Do you think my swiss bank (where my salary is paid) would loan me the money to buy a house in the UK?

I have no long moved here and and a single guy with no dependants, I would like to get my foot on the property ladder but never realy had the chance when I lived in the UK. Obviously having not been here long this doesn't go in my favour.

Any thoughts/advice?

Thanks
Ritchie
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Old 06.01.2010, 15:25
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Re: Buying a house in the UK

No, because if it goes pear shapped, it is a hassle for them to try and recoup the money on the investment.

I bought a house a while back in the UK (around 8 years ago), for similar reasons to you (i.e. wanting foot on the ladder). Had to go through a broker to get the mortgage as no one would touch me.

This irony is that you may find it really difficult to get a mortgage with the current economic crisis:
  • On the one side Swiss banks won't want to invest in personal properties abroad
  • On the other side, UK banks will be cautious about lending to someone overseas as a private investor
As I mentioned we went through a broker and got a mortgage with Bank of Scotland. It turned out fine as we managed to pay off in 6 years thanks to an inflated Swiss wage...

If you want I can see if I can find the name of the broker in my files. PM me.
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Old 06.01.2010, 15:37
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Re: Buying a house in the UK

I agree with Carlos that you will need to borrow from a UK based lender.

Also bear in mind that as you will not be resident in the property they are only like to give you a buy-to-let mortgage. This will require a higher % deposit and also likely to have a higher interest rate
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Old 06.01.2010, 15:47
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Re: Buying a house in the UK

Agreed re higher rate - ours was minimum 1% above high-street rates (which were also inflated above BoE rates).

I don't remember if ours was forcibly a buy-to-let mortgage to be honest, although it does ring a bell. We bought just before the peak of buy-to-let caught on and banks started getting sniffy about it (i.e. charging more), so we may have got under the radar (though they did clobber us with the additional +1% as stated above anyway).

Although, I was pleased when they reduced my monthly repayments from 0.84 GBP/month to 0.68 GBP/month when the BoE brought interest rates crashing down... I framed the letter
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Old 06.01.2010, 16:40
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Re: Buying a house in the UK

I tried my bank, CS, last September on this. They would lend but only on a million GBP as a loan!! Anything smaller they would not enetertain - no idea why
UK lenders will not go for it either so it´s difficult to see how to do it.
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Old 06.01.2010, 16:49
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Re: Buying a house in the UK

Hello,

If you work for an international company, some mortgage lenders have schemes for expats who want to return home at some point in the future, and who therefore want to buy a property. This avoids the BTL mortgage, and will save you a few percentage points - I believe it applies even if you rent your property, as long as you have a definite intention to return.
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Old 06.01.2010, 17:15
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Re: Buying a house in the UK

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Hi Guys

Do you think my swiss bank (where my salary is paid) would loan me the money to buy a house in the UK?

I have no long moved here and and a single guy with no dependants, I would like to get my foot on the property ladder but never realy had the chance when I lived in the UK. Obviously having not been here long this doesn't go in my favour.

Any thoughts/advice?

Thanks
Ritchie
This doesn't answer your direct question; BUT if you are buying property as an investment; I personally would not touch property at the moment.

As you are single: property like this will tie you down and the fact that you are working abroad means that you are willing to move and having a property will tie you down.
Don't think that you just leave it to a rental agent to sort out becuase you will never ever make money on it once they have charged their fees, delt with tenents, made repairs and maintained (high charges from their mates) your property.
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Old 06.01.2010, 17:23
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Re: Buying a house in the UK

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Don't think that you just leave it to a rental agent to sort out becuase you will never ever make money on it once they have charged their fees, delt with tenents, made repairs and maintained (high charges from their mates) your property.
It's worked for us. We've been making an extra 350-400 GBP/mo after expenses for the past 7 of 8 years...

I'll agree that it really does depend where you buy and the agent you have, but we're really happy with ours (Your Move, Ashford). It did help that my in-laws also had a property with the same agent and they lived locally, so we always felt that if a face was needed in the shop that was a possibility. We have, however, never needed it (cue frantic touching of wood) even with one "serious" episode (won't go into details).

I'd also add that we are insured to the hilt (i.e. rent indemnity, damage etc. etc.). Hence came out trumps during the aforementioned episode.

I guess, however, that there will be horror stories galore...

A final point - the house was the only investment we had to survive untouched by the recent financial turmoil...
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  #9  
Old 06.01.2010, 17:28
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Re: Buying a house in the UK

As an expat you can get around 5% with RBS at the moment. It's easy - go through a broker, it's around 350 quid to them, and they provide quite a service for it.
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Old 06.01.2010, 17:38
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Re: Buying a house in the UK

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It's worked for us. We've been making an extra 350-400 GBP/mo after expenses for the past 7 of 8 years...
You have to look at Return on Capital.
I would guess that you would have more than 70% equity in the property if you purchased the place at least 8 years ago because house prices went up.

If I was to buy a 2 bedroom house in poorer part of North London it would cost me £180,000.
Let us pretend I could get a 100% mortgage (impossible now) and paid interest only.
It would cost me £700 a month in interest (based on a morgage for your own house; interest rate would be much higher if on a buy to let basis)
I could rent this property out if I was lucky £800 per month.
Rental agency would charge me 10% commission => £80 a month.
I am now down to a net income of £20 a month.
I still have other costs; repairs; landlords certificate; building insurance and this is based on the assumption that it is rented out always.

Costs on initial buy:
Stamp duty 1% => £1,800
Legal fees => £750
Mortgage Set Up Fee => £1,000

When you sell:
Estate agent fees 1.5% => £2,700
Legal Fees => £750
Mortgage Redemption Fee => £500


You would therefore only buy on the basis of Capital Growth and I personally do not think there will be any Capital Growth for the next three years at least. I might be wrong.
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  #11  
Old 06.01.2010, 17:42
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Re: Buying a house in the UK

If you borrow in GBP, I'd get a fixed rate loan cos when QE ends and the UK loses its AAA rating, it's going to get very ugly.
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Old 06.01.2010, 17:45
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Re: Buying a house in the UK

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This doesn't answer your direct question; BUT if you are buying property as an investment; I personally would not touch property at the moment.
A good friend also has a number of flats, at least 20, as well as many commercial properties. They do trading, developing and re-negotiating the leases for a living and money can't be made as easily as it used to.

Rents have come down since there are many more rental properties on the market with those not wanting to sell at a loss (or at what they bought it for 2-3 years ago) are renting their places out. Tenants have never had it better and expect newly renovated and decorated places. I needed to install a new bathroom, carpets and paint every wall again just to get a new tenant this year. The previous tenant lost her job and couldn't afford the flat anymore.

The UK is really generous with tax free allowances for non-residents and capital gains tax only becomes due if you return to the UK within 7 years of selling a property.
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Old 06.01.2010, 17:47
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Re: Buying a house in the UK

As an owner of a North London property which I let, I can confirm all this is true. This pepetual fascination with getting on the property ladder (in the face of say, stocks) is endlessly perplexing for me.

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You have to look at Return on Capital.
I would guess that you would have more than 70% equity in the property if you purchased the place at least 8 years ago because house prices went up.

If I was to buy a 2 bedroom house in poorer part of North London it would cost me £180,000.
Let us pretend I could get a 100% mortgage (impossible now) and paid interest only.
It would cost me £700 a month in interest (based on a morgage for your own house; interest rate would be much higher if on a buy to let basis)
I could rent this property out if I was lucky £800 per month.
Rental agency would charge me 10% commission => £80 a month.
I am now down to a net income of £20 a month.
I still have other costs; repairs; landlords certificate; building insurance and this is based on the assumption that it is rented out always.

Costs on initial buy:
Stamp duty 1% => £1,800
Legal fees => £750
Mortgage Set Up Fee => £1,000

When you sell:
Estate agent fees 1.5% => £2,700
Legal Fees => £750
Mortgage Redemption Fee => £500


You would therefore only buy on the basis of Capital Growth and I personally do not think there will be any Capital Growth for the next three years at least. I might be wrong.
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Old 06.01.2010, 17:47
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Re: Buying a house in the UK

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If you borrow in GBP, I'd get a fixed rate loan cos when QE ends and the UK loses its AAA rating, it's going to get very ugly.
Phil MCR is correct in that you should borrow in sterling. Sterling will probably fall further (I would not be surprised to see £1 = CHF1.2 in two years time.
I would wait one year before fixing interest rates if at all. I actually think that interest rates wont go up on mortages because too many owners would not be able to pay there mortage repayments and with unemployment having to go up rapidly soon that will not help either.
If interst rates went up and there were more repossessions and people giving back the keys, then property would fall further which is why my advise would not be to buy property in the UK.
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Old 06.01.2010, 17:51
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Re: Buying a house in the UK

Cashboy, I'm not going to debate the money point, as you are quite probably right (not to mention its above my head ), but it does depend a little why you are doing it.

If you want to get a foot on the ladder anyway, I don't think it is such a bad return - if I look at all my other stocks and shares, they all plummeted in value and I had to sell them off - due to other comitments - at a loss...

The other thing is why buy in London where prices are majorly over inflated? We purchased in Ashford and thanks to the new rail links to London is an excellent location (when the trains aren't being screwed over by fluffy French snow, LOL!).

Finally, with my fancy Swiss salary we were able to pay off a mortgage of c.70k GBP in 5-6 years. So we've not been badly cripled by the high interest rates the bank were charging. That's before you factor in the really weak GBP (we were being stung by the 1:2.6 exchange rate!!).
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Old 06.01.2010, 17:52
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Re: Buying a house in the UK

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You have to look at Return on Capital.
...
Rental agency would charge me 10% commission => £80 a month.
I am now down to a net income of £20 a month.
I still have other costs; repairs; landlords certificate; building insurance and this is based on the assumption that it is rented out always.
Returns used to be 9% now 5% is difficult to get.

Using an agency for finding a tenant they charge as little as 2 weeks rent.
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Old 06.01.2010, 17:54
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Re: Buying a house in the UK

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As an owner of a North London property which I let, I can confirm all this is true. This pepetual fascination with getting on the property ladder (in the face of say, stocks) is endlessly perplexing for me.

The need to get on the ladder was driven by my wife... I just do what she says... Now that we've been here so long, she doesn't particularly want to leave CH so we've still got a property in the UK...
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Old 06.01.2010, 19:35
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Re: Buying a house in the UK

This is a great site for helping you figure out if to invest and where to invest.

http://www.globalpropertyguide.com/
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