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Bank Guarantee - What Exactly Is It?
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Gopes
Posts: 128 Forumite
Folks,
I am in the process of buying a flat in Portugal as an investment. I had been intending on getting a mortgage with a portuguese bank (I lived there for many years and speak the lingo). I actually contacted several banks, and pushed ahead for a decision in principle with 2 banks. After 6 weeks of dragging their heels for one reason or another, they both came back with rejections (to my initial application for a 85%LTV mortgage).
Irritatingly, they had both been 100% confident about my chances of getting a mortgage, given my excellent (by portuguese standards) income, etc., etc.
Stupidly, about 3 days before the rejection arrived out of the blue, I put down the 10% initial deposit on the property (about £13k), so I am now committed - some lessons to be learnt here!!!
Anyway, I am considering other options, and my brother who works in Portugal suggested getting a "Bank Guarantee" from a UK bank, which gives the portuguese lender the security that they will not lose out if I default on my payments.
As he explained it, I would pay a "small" percentage commission to my UK bank (Natwest), and they would provide some sort of certificate to the portuguese lender, guaranteeing to meet my obligations should I default.
Is this something that exists in England? Is it a standard thing, and does anyone have any information/suggestions about this option, regarding cost.
The other alternative is to get an overseas mortgage with a uk lender, but given the low euro interest rate, it may be cheaper to borrow abroad.
Views?
Thanks
Gopes
I am in the process of buying a flat in Portugal as an investment. I had been intending on getting a mortgage with a portuguese bank (I lived there for many years and speak the lingo). I actually contacted several banks, and pushed ahead for a decision in principle with 2 banks. After 6 weeks of dragging their heels for one reason or another, they both came back with rejections (to my initial application for a 85%LTV mortgage).
Irritatingly, they had both been 100% confident about my chances of getting a mortgage, given my excellent (by portuguese standards) income, etc., etc.
Stupidly, about 3 days before the rejection arrived out of the blue, I put down the 10% initial deposit on the property (about £13k), so I am now committed - some lessons to be learnt here!!!
Anyway, I am considering other options, and my brother who works in Portugal suggested getting a "Bank Guarantee" from a UK bank, which gives the portuguese lender the security that they will not lose out if I default on my payments.
As he explained it, I would pay a "small" percentage commission to my UK bank (Natwest), and they would provide some sort of certificate to the portuguese lender, guaranteeing to meet my obligations should I default.
Is this something that exists in England? Is it a standard thing, and does anyone have any information/suggestions about this option, regarding cost.
The other alternative is to get an overseas mortgage with a uk lender, but given the low euro interest rate, it may be cheaper to borrow abroad.
Views?
Thanks
Gopes
0
Comments
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The only 'bank Guarantee' I know of is where foreign developers issue one designed to protect buyers in the event the developer goes bust.
I cant imagine a UK Bank will guarantee your payments, otherwise everyone would be clammouring for this service. How on Earth could a Bank give such a guarantee / warranty? Doesnt ring true.0 -
That seems to make sense - I had wondered whether paying my bank e.g. 1% per annum to guarantee that I would meet payments would be a rather large risk for the bank to take on...
Cheers
Gopes0 -
You could try https://www.mortgagesoverseas.com which is a British company dealing in overseas mortgages by the name of Conti Financial.I am an Independent Financial Adviser with 26 years experience.0
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