Guide To American Mortgages
Getting a mortgage in the USA
If you want an American Mortgage please fill in this form
America has always been a popular destination for UK overseas property buyers. The similarity in culture, the consumer society and the wide variety of climate make it an easy choice for a holiday home. This guide will help you towards buying your piece of the American dream.
The key facts to buying in America
How much can I borrow?
The maximum amount you can borrow as an American mortgage is 75% of the value of the property (same if you are remortgaging). The minimum mortgage amount is $100,000
What are the Interest Rates?
The American mortgage maket work mainly on fixed rate deals so we tend to talk about 15 and 30 year fixed rates. Currently these are around 3-4% but will move if long dated US Treasury prices move
What else do I need to know about American mortgages?
The maximum mortgage term available is 25 years and the maximum age for getting a mortgage in America is 75 years. Both repayment and Interest-only mortgages are available.
What is the Legal process like?
The exact terms vary from state to state so do get yourself and American Realtor (Estate Agent). We can assist you here. They will be particularly helpful with Residency and Visa requirements.
In the US, if you put an offer on a property, thus means you are accepting it in the condition seen and you cannot bring up any defects at a later date in an attempt to lower the price. It is therefore important that when you find a property you like you get a survey ("Inspection Report") done.
Once the first contract is signed a completion date is set, usually about 30 days later, upon which date the purchase will be finalised.
In the interim, it is recommended that you take some "Title insurance". This protects you in case it is found out in this period that a third party, such as a mortgage lender, has an undisclosed title on the property that may prevent the sale (referred to as the title being "clouded". This insurance covers any costs you may have incurred as a result of such "clouds".
All going well, on completion day the entire funds for the property are transferred and the process is complete
As we have the same language and a similar culture to America, it is easy to be lulled into the sense that the process is easy – this is how mistakes get made! Good advice is essential in any overseas property purchase and we can make sure you are dealing with experts. Fill in the contact form opposite and get in touch.
Lastly, to get the best rates on your foreign exchange transactions we strongly recommend you open an account with HiFX. Quite simply, they will provide a far better exchange rate than your bank and they can do one off transactions or allow you to lock in a guaranteed FX rate on mortgage payments for up to one year in advance. To find out more and sign up, visit their website here http://www.hifxonline.co.uk
Overseas Mortgages are not regulated by the Financial Conduct Authority, nor are they protected by the Financial Ombudsman Service or Financial Services Compensation Scheme. They may not be covered by the home regulator of the country concerned either, so you should consider the risks carefully.
- The maximum amount you can borrow is 70-75% of the value of the property
- The market works mainly on fixed rate deals, currently around 4-5%
- Theaximum mortgage term available is 25 years/Maximum age for getting a mortgage is 75
- The minimum mortgage amount is $100,000
Frequently Asked Questions
What is the maximum LTV available?
For non-residents the max LTV is usually 65%, maybe 70% in some rare cases.
What will it cost to arrange my mortgage?
The fee to help prepare your mortgage varies from country to country but will be made clear to you in advance. It is usually 1-1.5% of the mortgage amount.
Will my UK credit record affect the success of my application?
Yes, it is a key factor in the eligibility criteria.
What is the min/max mortgage available?
We only arrange mortgages of at least approx €100,000/$100,000. LTVs available vary from country to country but generally are n higher than about 70%
How important is my income?
This is hugely important. Most overseas countries look at the Debt to Income ratio i.e. the percentage of your total net monthly income that is used to make debt repayments such as domestic mortgages, personal loans, car payments, credit cards AND the mortgage you are now applying for. Depending on the country you wish to buy in, this DTIR is generally between 30-40% so can be quite strict. In our experience this is the single biggest obstacle faced by UK buyers when looking to purchase overseas.
What is needed to apply
Applying for a Overseas Mortgage is very easy. Below are listed the things you need in order to apply.
- Eligibility CriteriaClean credit and sufficient income to make repayments is required.
- Documents RequiredInitially just an application form but in time you will be asked to prove income and ID
- Additional CommentsThe entire process takes 6-8 weeks depending on the country you are buying in
Getting a mortgage in America isn't as difficult as you might think. The key thing is affordability and specifically the Debt To Income Ratio requirements (DTIR). This stipulates that your total debt repayments (including your proposed American mortgage) cannot be more that about 30-35% of you net income each month. In short this means if you have a lot of UK debt, you will likely not qualify. But if you can meet this requirement, you should be ok. Call if you'd like to discuss further.
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