If you are a US citizen looking to invest in London property, you are definitely not alone. If you're wondering how easy it is to get a mortgage in the UK as a non-UK citizen, the good news is that there are many professional lenders willing to offer it to you.

The UK property market is the fifth most popular choice for American investors looking for a second home or investment property abroad. And in terms of location, London remains a major attraction with the most profitable potential for raising capital.

However, understanding the investment opportunity and actually securing a British mortgage as a US citizen are two different things. There are a number of key differences in how financial and purchasing systems work here, and it's good to understand the basics before you start looking for a home to buy in London.

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Why should you buy in London?

London is considered a "safe haven" for investors.

Culture and lifestyle are all great, but American buyers also want to know if the London property market is a good place to invest their money.

Yes that is right. London's property stability is based on British property law, which is probably the strongest in the world. And even when international markets are a little shaky (as they are now after an international pandemic), London property prices are safe. Capital gains in property purchases in London are increasing demand from international buyers.

Financing British property is very affordable. Currently the exchange rate is cheaper than the dollar on your side. And the UK financial market offers relatively cheap loans, even at the highest levels. The London market welcomes overseas buyers (such as US citizens) who are considered high risk jurisdictions. For our American customers, we can find 2-3% interest rates with a 25% down payment.

The availability of reputable real estate in the capital means that investors can invest all of their assets (at an additional cost) in a high-quality property instead of building a series of properties. Get the total value of the asset you want. With.

Demand for rental properties in central London and the wider area remains strong. Currently 27% of Londoners rent privately and this will increase to 40% by 2030. Rental yields are currently very attractive with strong growth predicted.

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London property investment potential and issues

You can expect to earn around 50% interest over 10 years on leading London properties.

Nobody promises you. But for the most favorable areas of London, Kensington and Chelsea, the UK house price index is showing a modest increase of 57.4% in the decade ended January 2020 (based on land price data rather than property surveys).

If we look at the whole of London, the rise in house prices has increased since 2012. The average price of a London property in 2012 was 2 292,000. Ten years later, that number rises 78% to 7667,000.

Consider the issues that arise when applying for a UK mortgage as a US citizen - the Foreign Account Tax Compliance Act 2010 requires you to report your non-US financial assets to the IRS annually. The extra paperwork involved in the transaction isn't a burden many UK street loan agencies are willing to carry, so they wouldn't even consider applying for a US mortgage.

However, even if your salary is paid in foreign currency or you want assets such as portfolios, other assets and funds, there are private lenders and specialist lenders willing to provide the necessary disclosure agreements. Further forward. Flexible loan criteria and interest rates

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Difference Between Real Estate and British Real Estate Agents

As a real estate buyer in the United States, you will become accustomed to hiring a real estate agent to work with you and find the most suitable property to view. And you usually pay half of the seller's total cost of housing, or about 6%.

In the UK, estate agents only act on behalf of sellers (and charge approximately 1% to 4% + VAT on the purchase price). As a buyer, you do not pay any realtor fees.

The downside... Most sellers only list their assets with one real estate agent so they can make less money, so you should contact many real estate agents to get them to see all the properties that might be right for you.

You will be bombarded with the details of the property. Realtors rarely review what they send you, so you have to do a lot more work as a buyer.

You can instruct a buying agent to act as a US real estate agent for you and provide the level of service American buyers seek.

They may charge a flat rate "purchase advisory fee" and a percentage of the purchase price, or a much higher percentage of the difference between the original asking price and the purchase price they have agreed on for you.

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Investing in London property can help you get a UK visa

Overseas investors are eligible for a UK Premium Investment Visa if they have میلیون 2 million or more to invest in the UK and other eligibility requirements are very simple. And this amount can be fully invested in the property.

A Tier 1 visa allows you to come to the UK for a period of 3 years and 4 months. You can then apply for a visa extension for another 2 years and then apply for permanent residence.

If you have an investment of 10 million میلیون, after 2 years you can apply for permanent residence.

If you are a US citizen and do not currently have a visa, an experienced mortgage broker can find a UK mortgage offer for you.

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How does the UK legal system differ from the US?

The legal system for buying a house differs in the UK. Scotland has completely different property laws than the United Kingdom. Your legal representative in London will refer to "English law" (rather than "English law" or "English law").

In the UK, an accepted proposal is not binding until almost the end of the legal process where the contracts are "changed".

At any time until then, the buyer may be "surprised" by a higher offer (this is not an official legal term), or the buyer may lower their price just before the exchange.

It is recommended that you choose a lawyer who is used to working with clients abroad (a lawyer in the UK) and choose what you need to know, for example, about the difference between buying an apartment in the United States and buying an apartment for Rent in the UK. .

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One of our American clients assumed that the UK had the same legal "assumption" as in the United States

The couple bought in the name of the husband only for convenience, assuming that in the event of the husband's unfortunate death the mortgage would be transferred to the wife. This is not the case - in the UK the property is approved and then the spouse has to apply for financing on their behalf and may not be eligible. So we needed to quickly rebuild their debt.

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How Does UK Property Finance Work?

American buyers are used to getting loan approval before they find property.

You can get a DIP on your finances in advance to show to real estate agents in the UK.

The exact approval of your mortgage depends on the specific property you want to buy and the final purchase price you agree to. Before that, you may have some DIPs by changing the purchase details.

Fixed or Fixed Interest Rates: Many American buyers are accustomed to fixed rates on their finances over the life of their mortgages. It is surprising to many to know that UK interest rates are usually "fixed" for the first 2 to 5 years of a 20 or 25 year loan.

After that, you'll need to find a new deal to prevent your (or your broker's) lender from returning to a much higher standard variable rate (floating rate).

US FATCA (Foreign Account Tax Regulation Act 2010) means that British lenders must do much more to comply with US borrowers. This causes some to give up.

A good mortgage broker can get you a mortgage lender who knows the ropes.

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Can you rent your property if you don't live there?

If you don't want to live in London, it's certainly possible to get a UK mortgage that allows you to rent and buy your property in London. When you begin the process of finding the right lender, you should state this intention up front.

If you use the services of a UK mortgage broker, they can find a lender who "permits".

If you are buying an apartment or house as rental property primarily for rental purposes (known as "rent" in the UK) to generate rental income, it must be purchased with a different financial type. Mortgage "buy for rent" instead of residential mortgage.

Some London city councils require vacant properties for vacant homes – often only for homes that have been vacant for more than two years.

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Hidden costs you need to know about UK mortgage

Many American customers do their research online and come up with an idea of ​​the interest rates they want us to find for them.

If you're using a UK mortgage broker, their job is to consider additional costs and fees and usually find a mortgage deal that's cheaper for you.

There will be a mortgage application fee (usually around 99 999), legal fees, and an appraisal fee (varies depending on the price of your property). You should also consider the cost of stamps and title deed registration fees.

Also, if you want to sell the property more than 2 to 5 years ago, you need to know if there is an ERC fee from the lender.

There is also a mortgage broker fee (this would be the lowest of all professional expenses). The cost of this fee should outweigh your savings in finding the best financial resources available, as well as time and stress.

A UK Mortgage Adviser will talk to you about all the costs of buying a property in the UK so you are fully informed.

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How long does it take to sign a contract?

UK Mortgage Guarantee When you are a US citizen, once you find a good UK mortgage broker and deposit the money in your bank account, it usually takes around 6 to 8 weeks to settle.

Some lenders need more information than others, and this may depend on the complexity of your income and the currency you earn.

A good UK mortgage advisor with extensive market knowledge will save you time in the first place. They will take your mortgage application directly to an appropriate lender who knows they will take care of your case.

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A Quick Guide to Financing a London Property

1. You make a principled financial decision from a real estate loan.
2. Once your offer of a property is accepted by the seller, you (or your mortgage broker) apply for a complete mortgage. At this point, you will pay any brokerage fees and start paying legal fees and valuations.
3. The financial company hires an appraiser to determine the value of the property - they will pass you on the costs of this work and their legal work. Lawyers for financial lenders, get you and the seller involved.
4. After the survey evaluation, legal advice, and acceptance of the completion research, the contracts are finalized and the completion date is determined, after which the contracts are "modified".
5. At this stage a deposit - usually 10% of the purchase price - is deposited into the lawyer's account and the contract is binding.
6. The deposit is usually paid directly by you, the buyer, rather than your financial company. If you take a 95% mortgage and only have 5% of the funds available for deposit, your attorney will usually negotiate a 5% swap deposit. Other debts are usually paid at this point.
7. On the "Completion Date" your finance company will pay the mortgage funds into the seller's attorney account and the purchase will be "complete".

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Get the budget you need to buy a property in London

Major lenders in the UK (often referred to as "street banks") have largely withdrawn from providing mortgages to property buyers with US citizenship status.

But there are banks and private lenders ready to do the extra administrative and supervisory work that is needed.

To access them, you need the support of an experienced, highly skilled and qualified professional from a UK financial broker.