If you do not already have the savings or are planning to release equity from your UK property to acquire a home in Florida, you will almost certainly need to take out a mortgage to finance your property acquisition.
When it comes to purchasing property in Florida, it is strongly advised that you start arranging your US mortgage almost before you do anything else to allow you to move forward with confidence in the knowledge that you have the funds in place to purchase the property in Florida.
Applying for a mortgage early on will help to give you a better idea of how much you can spend on your Florida property and can work out the likely future financial implications of your purchase.
It would be unwise to leave the financial side of your Florida property purchase until the end and this may leave you in a weaker position, especially if you need to move quickly or have to raise finance in a rush, which could meant that you fail to a mortgage at the most attractive borrowing rate.
Despite Florida’s recent economic woes and boom-and-bust nature of the housing market with contributed to the wider financial crash in 2008, mortgage market conditions have improved rapidly since the Florida property market started to embark on the long road to recovery, with plenty of US lenders willing to lend to overseas nationals.
In fact, the main lenders are very keen to lend to property purchasers, including non-residents, with some attractive interest rates being offered. However, you should still analyse and compare a range of different products and services offered by different companies.
For a mortgage in Florida, you will generally need a minimum deposit of 20-30% of the property’s purchase price. The Florida mortgage will be secured on the property for sale in Florida you are buying, meaning your UK assets will not be put at risk in the event of default.
Most Florida mortgages are normally of repayment loans, meaning you pay back both capital and interest. There have been a number of innovative mortgage products introduced in recent years with overseas investors in mind. When you purchase property in Florida, the repayment timetables available generally range from 10 to 30 years.
The minimum sum which you can borrow to buy a property in Florida is $50,000 with credit rating and income taken into account. Interest rates vary but they are generally at competitive levels, currently starting from around 5% – Florida mortgage rates are generally higher than those available in the UK.
Also, set-up fees can generally add around 5% to the cost of your Florida home.
It is also worth noting that you will generally not qualify for a mortgage in Florida unless your home is insured.
It is a totally different ball game if you are planning to purchase a repossessed, or foreclosed, property from the bank, with some lenders willing to offer higher loan-to-value (LTV) mortgages in an effort to offload the remaining repossessed stock on their books.
Your property in Florida will be at risk if you do not keep up repayments on a mortgage secured on it. Be sure you understand the repayments and can afford them before entering into any credit agreement.