Before purchasing a property in the U.K., many customers choose the format of cash buy as their payment method. However, some customers choose to apply for a mortgage before buying the property. In order to ease our buyers’ concern,Global Immigrate Overseas Property team is here to walk you through the progress.
Let us talk about the requirements for applying for a mortgage. The applicants’ background, such as citizenship, credit history, and so on are highly crucial in applying for a mortgage, as this will directly affect the application. Since the mortgage period is usually up to 25-30 years, the client must be at least 25 years old and the oldest contract period can up to a 65 years old applicant (depending on bank requirements). The payment period depends on the mortgage application; the asset requirements for applying for a UK mortgage must be at least £ 250,000. As the United Kingdom is very strict in preventing money laundering, applicants are required to provide solid explanations for their assets, and the procedures are strict. Each bank or mortgage institution has its own set of money laundering prevention systems, and applicants must comply with regulations and should provide the required documents for application.
Second, the mortgage rate in the United Kingdom is also a huge concern for our customers. If the mortgage requirements are met, most likely banks can grant 30-40% of the applicant’s annual salary as loan, the mortgage ratio can reach 75%, and the interest rate mostly starts from 2%.
On the other hand, there are two common mortgage schemes in the U.K. Firstly, Repayment Mortgage, which is the most commonly used one. It is a conventional mortgage scheme which requires the applicant to repay both the loan and interest. The second type is Endowment Mortgage, which sounds attractive somehow, but in order to protect the interest of the financial institutes and to prevent any potential loss, the financial institutes require the applicant to buy in a life insurance policy together with the application.. Therefore, applicants must repay the policy premium as well as the interest. Of course, all mortgage details are different among different institutes.
Mortgage overseas applicant usually have to apply through a mortgage broker or a bank. However, mortgage service can only be provided by banks in Hong Kong that have U.K. branches, and will work as a referral case to the mortgage department in the U.K.. Customers are reminded to spare 3-6 months for mortgage application before the purchase, and brokers details can refer back to our professional overseas property team for more!