Pulaski

I think that you may have your logic upside down. ..... UK are a British citizen with British income, right? If you borrow USD but have to use GBP to make the payments you have a currency exposure to the repayments. If the GBP continues to slide your monthly mortgage payments will rise, in GBP terms, even if US interest rates don't. In practice interest rates are likely to rise (unless you get a fixed rate mortgage, which is the common thing to do here), and the GBP will slide, so you will be hit with a double whammy.

I suppose that you are worried about a movement in the USD/GBP rate leaving you with a mortgage worth more than the house, right? I think that you would likely to be better off financing in GBP, to match your GBP income, if at all possible - perhaps a second mortgage on your UK home? If you have to finance in USD try speaking to one of the larger banks, say Citibank, who should be able to fix you up with an FX swap, converting your USD mortage into a GBP liabilty.

shaggly

Thanks Pulaski ,

My rationale is that by owning a USD asset and paying in USD then sure i could get hit on the exchange rate but only on the smaller amounts of the mortgage repayments and if it went too far say then i could sell the property and pay back the mortagage and not lose much , on the other hand if the rate moves back higher then i will convert it into GBP or pay it off . I only really intend to keep the mortgage until we achieve a satisfactory exchange rate .
I actually trade currency options for a living so am very close to the market all day long and i think i will get a chance over the next year so i just want to fund it as cheaply as possible in the interim .
I have an account with Citibank here in London and amazingly when i contacted them for a USD mortgage they sent me on to an external broker that they use for all their UK mortagage services and they were not able to even do anything in USD !!!!
I have been speaking to the guys that Ray recommended in an earlier post and they have been excellent , very helpful , although i get the impression that not being a US resident i am being penalised quite heavily in the rate from local providers and strangely it seems that i get a better rate by obtaining the mortgage from the UK anyway .
Still i wont mind being poor if i get a great view of the beach .

krizzy

If you're going to be happy with your home no matter what the cost.....then good hunting......and post a picture after closing.....

Pulaski

The problems you are having in getting a US mortgage are likely to be caused by your absence of any US credit history. Credit history, and your "FICO credit score" are key determinants in getting a US mortgage, or at least one at a decent rate. In practice you will need to make a 20% downpayment on any house you buy AND be a US citizen or permanent resident. As a non-resident you are starting with a handicap, and you'll need to be thinking of a 30% downpayment or more to be able to get a competitive interest rate.

Other ways that you can lower rates (after making a 30% down payment ) include taking a 15 year mortage, as opposed to the more common (in the US) 30 year mortgage, or taking a floating rate mortage, or one with an initial fixed period followed by a floating rate e.g. "a 3/1 ARM" or "5/1 ARM", fixed for 3/5 years resepctively, and is then subject to annual rate resets.

shaggly

so far i have got a 6.37 pct offer but that has penalty clauses stuck all over it . cant sell the property for 12m ( seems wierd ) then further two years no early repayments . That is from a US provider , but from UK i can get 6.01 pct with no early payment penalties , however with a catch of much larger up front fees . Seems to be swings and roundabouts so i doubt if i will see much better .
Does anyone think the upcoming increases in US interest rates are going to have a cooling effect on the housing market there ? The UK market has been dropping for the past year now despite rates at 4.75 and i am wondering whether the US market has gotten ahead of itself also . The condos i have been looking at seem to have increased at an amazing rate over the last two years and there now seems to be an immense amount of building work all along the coastline . They do seem to be being snapped up off plan pretty quickly though but there does seem to be a lot of supply coming to market . I am beginning to wonder whether it would be better to buy something smaller to begin with and trade up on any subsequent downturn as the market reurns to normality ?? Of course the Realtors i have spoken with are more of the opinion that the gulf coast still has some of the cheapest property of its type in the US and that they still expect gains of 30-40 pct in ther near term , i wonder how many they have bought as an investment !!
I see there are a few relatively local posters on this forum , what do you think about buying something a little further down say Redington beach area ( full beach views for abt 550k ) or paying up to be a litttle further north 750k for similar on sand key or 850 for south clearwater beach . Do the benefits justify the extra cost . I have not spent much any real time down on the lower beaches only north clearwater beach . I dont particularly want somewhere that is nice for one block then gets drab or rundown a couple of blocks further .
Sorry i seem to have verbal diorreah this morning buts its monday and i havent typed anything for two days so fingers are fresh .
Nice week everyone .

fatbrit

Can't understand where you're coming from on this. If you do Florida a couple of times a year, it's cheaper to rent a villa or stay in a hotel. If you want to invest in US real estate because you believe it's a good investment, REITs are made just for you.

Personally, I believe many areas in the residential arena have already topped out and are overdue for stagnation or a fall. The FL condo market, where speculative buying has been the order of the day for a long time, is one such example. But, then again, there are many successful investors who buck the trend!

If you want comments on a US loan, you need to give full details about the terms: front-end fees and the terms alongside the rates. The prepayment penalty that worries you can usually be removed with around a 25 to 75 bps hit on the rate.

shaggly

Thanks everyone for the advice , i have now got a pretty decent offer of 5.56 pct , i can get the payment penalties lifted but will cost me a point up front but thats all cool , so its all systems go.

see you on the beach .........................................