advice please - can I use my houe in another country towards getting a mortgage?

sunny_skies

Hello ... I'm a newbie here, I'm sorry if this query has already been posted!

Firstly thanks for a great site and a lovely community on this forum, I've read a lot of the posts and learnt a lot and find everyone here very inspiring!

What I'd like to know is: my husband and I have a small property in South Africa (I'm South African, he's British, we're now both residing here permanently). Can I use this property to help me get a mortgage here? Would this mean I don't need a deposit?

It would be great to get a step-up somehow ...

Incidentally, I read Rich Dad Poor Dad and one suggestion in the book is that although traditionally property is viewed as an asset, that on closer inspection it isn't the best asset you can get - because constant maintenance and upkeep may disrupt the cash-flow more so than say renting. I know on the surface of things that doesn't sound quite right but it sure makes me feel better about not living in my own place! :rolleyes: Anyway just wondered what people would think of that.

Sorry two questions in one go ...!

Thanks for reading this!

maninthestreet

I don't believe a UK lender will lend money on an overseas property, but I might be wrong.

sunny_skies

thanks maininthestreet!

sorry I wasn't very clear - I'd like to apply for a mortgage to buy property here in the UK but I'm not sure my property in SA would count for anything?
:rolleyes:

happybroker

if there is a mortgage on the overseas property that commitment may be taken into account when a lender looks at how much they will lend you over here.

The fact that you own a property overseas will not add any value to your application over here I'm afraid.

bubblesmoney

will property abroad (mortgage free, bought for cash) count for collateral against mortgages in uk so that one gets higher LTV against uk property? i dont want to sell the property abroad as it has appreciated atleast 30times (in a little more than a decade since i bought it) even taking into account the slight fall in prices for land abroad, even if it crashes i dont think the price will crash by 30times hence would like to keep the property. was stupid enough to dispose a few other properties abroad years ago and now i cant even dream of buying the same property back in a few zillion years with the price rises there.

similarly will shares etc abroad be eligible as collateral for mortgages / loans in uk. has anyone used this method successfully yet?

also can equity be released in uk mortgages to buy property abroad? does one have to give a reason why the equity is being released from uk property? why i am asking is that, i know uk banks dont (as far as i know, have already enquired about this in hsbc and mortgage advisor suggested the equity release as a possible solution) give mortgages for foreign property, even banks like hsbc which operate abroad. but the hsbc foreign branch has higher mortgage rates in the other country. so am exploring options of making the best of both worlds by borrowing where cheaper and investing where max gains are anticipated. risky stratergy but cant see any better legal ways to multiply money. any pointers from people who have done this is much appreciated.

sunny_skies

wow bubbles - this sounds very similar to what I'm trying to do: make money by (now, I don't know the official terms yet I'm afraid!) using what I could get homeloan-wise here in the UK to buy in cheaper places.

I don't know yet whether this is a better strategy than using all that money and pooling it in one market (i.e. UK market) instead of spreading it across various property markets - which would surely help the risk?

The way I see it, I'm not planning on staying in the UK for longer than the next five years, if I was maybe it'd be a better strategy to get in on the housing market here ... the only reason I'm even thinking about it at all is because I'd just like to live in my own home! :think:

Anyway any advice would be appreciated, and bubbles any lessons you learned from your experiences buying many properties abroad would be really interesting! :A

JayZed

There are UK banks that offer mortgages for overseas properties - Barclays does, for a limited number of countries that includes South Africa (as Barclays owns ABSA). See http://www.barclays.co.uk/buyingabroad/sa_mortgage.html. I am not recommending this option, just pointing it out, and I don't know whether the interest rates are competitive. But since you are South African, why can't you just take out a mortgage on your South African property directly with ABSA or another South African bank?

I don't really understand your question, anyhow. You want to know if you can use your South African property to get a mortgage for a property here? A mortgage is a loan secured on a property. If it's secured on your South African property then that's the property that's mortgaged. You could of course use that loan as a deposit for a UK property. However, if you do that, the lender supplying the UK mortgage will take into account the fact that you are servicing a loan in RSA when calculating how much it's willing to lend you.

sunny_skies

hi jayzed

as I mentioned I don't have all the correct terminology just yet. what I mean is:

I have a house in South Africa. That has been bought with a loan that I got in South Africa.

I would like to now buy a house in the UK. I will be using a UK-based bank to get the home loan for the UK property.

I would like to know if my property in South Africa will help me get more money for the UK home loan, or if it will assist in me not having to put down such a big deposit.

Cazza

sunny_skies wrote: »

hi jayzed

as I mentioned I don't have all the correct terminology just yet. what I mean is:

I have a house in South Africa. That has been bought with a loan that I got in South Africa.

I would like to now buy a house in the UK. I will be using a UK-based bank to get the home loan for the UK property.

I would like to know if my property in South Africa will help me get more money for the UK home loan, or if it will assist in me not having to put down such a big deposit.

Short answer is no

Longer answer is that the sort of things which would assist you are your income or the amount of deposit you have to put down; form what you have said it doesn't look as though you receive any income from the property which is taxable in the UK and you're not planning to remortgage the property to put down a bigger deposit on the UK property. The UK lender will only be interested in the foreign property if you have a mortgage on it; if this is the case there's a good chance they will want to know what the repayments are because they may want to take this into account when calculating how much you can borrow.

HTH!

sunny_skies

oh right, thanks Cazza - well it was worth a try right?

I do let out the property but it is such a small amount when converted into pounds that it's hardly worth mentioning lol!

but thanks for all the advice guys - I really appreciate it! guess I'll just have to apply for the loan in the usual way!
:beer:

Cazza

sunny_skies wrote: »

oh right, thanks Cazza - well it was worth a try right?

If you don't ask you don't get! Good luck!