The United Kingdom is one of the most attractive countries in terms of obtaining loans for real estate, even loans for bad credit no guarantor on benefits are affordable. Here, citizens and foreigners not only have the opportunity to buy housing on the same terms, but also get a mortgage with a favorable interest rate for repayment.
Shortly about borrowing in the UK
To begin with, life on credit in the UK is a very common concept. Rarely, when a young family is able to buy housing for cash on the account is more likely an exception to the rule. But practically everyone can afford to buy real estate with the help of mortgage lending – the main thing is to get an official salary and pay taxes regularly.
Banks do not risk anything, since real estate itself becomes a guarantee and collateral for lending. At the same time, a buyer gets a loan with a relatively low repayment rate, which is also very profitable – rental rent in England, as a rule, is the same as the mortgage repayment percentage, and sometimes even higher – the real estate itself is constantly growing in price, which allows you to live in your own home and at the same time have a passive investment asset.
The advantages of mortgages for commercial real estate, real estate for rent (buy to let) and other investment types are obvious: in the case of Buy to Let Mortgage, interest on mortgage loans is paid off at the expense of rent, part of it is profit, and housing itself becomes more and more expensive every year. Therefore, the mortgage lending system in the UK has been worked out to the smallest detail and the market has a huge variety of financial lending institutions.
Lending terms and how to get the best ones
The main criteria that you should pay attention to when choosing a mortgage loan abroad are the interest rate and down payment.
In the UK in 2014, the average interest rate is from 3.5% to 5% at various lending institutions. It is worth noting that for non-residents, the lending interest rate may be slightly higher, it will probably vary between 4.5-5.5%. However, it all depends on the specific situation: the more transparent your income and the larger the size of your deposit are, the better conditions await you.The minimum percentage contribution varies from 10 to 30% today.
The main documents that will be needed to obtain a mortgage in the UK:
- documents proving permanent residence (address) – utility bills and other;
- documents confirming your income, solvency and origin of money: tax return, certificate of employment with proof of income, statement of your current account for the last 6 months with a reflection of the movement of the account in it;
- in some cases, an independent audit company report may be required.
When can I get a mortgage on my own, and when should I turn to a mortgage broker?
If you are a resident of the UK, receive stable official income, have a sufficient initial deposit, then most banks will be happy to provide you with loans on favorable terms.
The situation is a little more complicated if you are a foreigner. For example, recently, the largest English bank HSBC has ceased to issue certain types of mortgages even to those residents who do not have an unlimited residence permit – ILR, even with visas with permission to stay and work in the country for a long time.
In this case, you should turn to a mortgage broker who has access to the entire market of credit institutions of the country and will be able to choose the necessary loans for you with the most favorable conditions.
In addition, there are often situations when, for one reason or another, even residents of the UK face difficulties in obtaining loans from banking institutions. As a rule, banks put forward rather stringent requirements that they do not meet, since the demand for bank lending is already quite large – banks are the most competitive in terms of the loan interest rate. However, if your situation is very complicated, for example, your official salary is too small, but there are other sources of income (stocks, savings), then it is worthwhile to entrust the consideration of such a case to an individual broker who will be much more flexible and resourceful in such circumstances. An individual broker is interested in helping you – after all, he receives a reward only when you get loans.
The cost of mortgage broker services is from 1 to 3 percent on average and varies depending on the complexity of the situation and the value of the property.