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USA - lending criteria

Do I qualify for a mortgage in the USA?

To qualify for a mortgage in the USA, a calculation is used to establish whether you can afford to maintain the mortgage repayments. This will automatically happen when you complete the application form, and Conti won’t charge you for this service.

How much can I borrow?

• Calculation based on the valuation or purchase price, whichever is the lower

• Up to 70% of LTV available for house purchase, remortgage or home improvements.

• Based on joint Gross monthly income, where joint income is applicable

• Existing liabilities, e.g. mortgage or rental payments, loans, credit card payments and maintenance are taken into account, together with the proposed American mortgage payments. All this must not exceed 38% of your monthly gross income. American lenders may take up to 70% of any proposed rental income into account with proof of leases

What evidence of income do I need?

If you are employed:
• Your last three month’s payslips
• Your latest P60 and/or Employers Reference
• Your last six month’s personal bank statements

If you are self-employed:
• Your last two year’s accounts & two years tax returns
• Your last six month’s personal bank statements.

Example mortgage payments for US Dollar mortgage only:

If, for example, your gross joint monthly income is £2,500, 38% of this equates to £950. If your only liability is your mortgage payment, of say £300 per month, this would leave a balance of £650 for your American mortgage repayment

Example mortgage payments for Sterling & other currency mortgages:

If, for example, your gross annual income is £100k per annum we will use 5 x £100k, minus any existing mortgage/other existing debts. For example, £100k per annum x 5 = £500k minus existing mortgage borrowing of £75k & no other existing debts, we could therefore lend £425k, subject to a maximum 70% LTV.

What types of American mortgages are available?

For our latest rates and to see the different types of American mortgages on offer, please visit our website or speak to one of our advisers.
• Loans are available up to 70% of the property’s value.
• The maximum term of any mortgage is 30 years, this varies on the type of loan
• Repayment and Interest Only mortgages are available
• Mortgages are available in US dollars, Sterling & other currencies – subject to your salary being paid in that currency.
• The minimum loan you can take out is US$150,000

Essential information for buying properties in USA

Buying property abroad is not necessarily the same as buying in the UK, there is other essential information you need to be aware of both before and during your property purchase.

• It is of paramount importance to seek independent advice from an overseas solicitor.

• You need to ensure that you will have full title to the property on completion and that you have the appropriate documents available for the lender. In the USA Bonded Title Companies are used, they will check and clear title on your and the lender’s behalf.

• Before signing the sales contract, the bank will require a copy of this document to be forwarded with the relevant application form. However you are able to sign this contract with the clause “subject to mortgage finance” as the contract, once signed is normally legally binding.

• You should check with the estate agent and/or your lawyer that you are aware of the costs charged by legal and Government authorities for buying a property in America. The lender will also have their own legal costs for assigning the loan, the cost of which they will normally advise you when they issue the mortgage offer. These associated fees/taxes will be approx. between 4% - 5% of the properties purchase price.

• Please be aware that the solicitor or notary may be incorporating costs for assigning the mortgage within their charges, and you should establish the actual cost before proceeding with a loan application.

• All American mortgages should have a suitable life assurance policy assigned to them. It is not mandatory but strongly advisable.

• Properties can be purchased either individually or in joint names to a maximum of four people, or in the name of either a US or Offshore Company.

© Conti Financial Services Limited 2008

This article is reproduced with the kind permission of Conti Financial Services Limited.

For information and advice on overseas mortgages and residential finance in over 30 countries, contact Conti Financial Services Ltd on www.mortgagesoverseas.com

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