US equity release for UK investment
Jan 4th 2006, 2:31 am
#1
Homebody
Thread Starter
Joined: Jan 2005
Location: HOME
Posts: 23,182
US equity release for UK investment
We are thinking of getting around $200k of equity out of our US house and use it to purchase a flat back in the UK.
Does anyone here (Fatbrit?) have any advice, suggestions, ideas about potential pitfalls?
In particular we were wondering whether it would be better to re-mortgage the whole amount or just get a second mortgage for the equity release.
TIA!
Does anyone here (Fatbrit?) have any advice, suggestions, ideas about potential pitfalls?
In particular we were wondering whether it would be better to re-mortgage the whole amount or just get a second mortgage for the equity release.
TIA!
Jan 4th 2006, 2:51 am
#2
Mr. Grumpy
Joined: Jun 2003
Location: Nashville, TN
Posts: 3,100
Re: US equity release for UK investment
Originally Posted by Elvira
We are thinking of getting around $200k of equity out of our US house and use it to purchase a flat back in the UK.
Does anyone here (Fatbrit?) have any advice, suggestions, ideas about potential pitfalls?
In particular we were wondering whether it would be better to re-mortgage the whole amount or just get a second mortgage for the equity release.
TIA!
Does anyone here (Fatbrit?) have any advice, suggestions, ideas about potential pitfalls?
In particular we were wondering whether it would be better to re-mortgage the whole amount or just get a second mortgage for the equity release.
TIA!
I'm using it to purchase 7 duplexes that each have $6-700 a month +ve cash flow.
resulting in $4000 a month to me in taxable income
if its a good investment Its worth it.
However, currency fluctuations can mess with your deal and 'cashing out' beyond a certain level can sting you with PMI
If your long-term future is here then I would invest here - many more very profitable opportunities
Jan 4th 2006, 2:56 am
#3
Homebody
Thread Starter
Joined: Jan 2005
Location: HOME
Posts: 23,182
Re: US equity release for UK investment
Originally Posted by BritGuyTN
If your long-term future is here then I would invest here - many more very profitable opportunities
We are considering that too - but we'd also like a pied-a-terre back home, and there's a possibility that # 2 son will go to uni in the UK, so a flat would be handy.
Jan 4th 2006, 3:06 am
#4
Septicity
Joined: May 2004
Posts: 23,762
Re: US equity release for UK investment
Originally Posted by Elvira
We are thinking of getting around $200k of equity out of our US house and use it to purchase a flat back in the UK.
Does anyone here (Fatbrit?) have any advice, suggestions, ideas about potential pitfalls?
In particular we were wondering whether it would be better to re-mortgage the whole amount or just get a second mortgage for the equity release.
TIA!
Does anyone here (Fatbrit?) have any advice, suggestions, ideas about potential pitfalls?
In particular we were wondering whether it would be better to re-mortgage the whole amount or just get a second mortgage for the equity release.
TIA!
Is your US residence currently on a mortgage?
If so,
Is there a pre-payment penalty?
What is the value of the house?
What is the balance on the mortgage?
Or (if you don't want to say to the two above), give me the LTV instead.
What sort of loan is it? (e.g. 7-year ARM, interest only @ 5.2%)
Your credit:
How long has it been established?
How many lines are there on it? (e.g. 1 mortgage, 2 car loans, 2 credit cards)
Jan 4th 2006, 3:12 am
#5
Account Closed
Joined: Sep 2005
Posts: 8,271
Re: US equity release for UK investment
Originally Posted by Elvira
We are considering that too - but we'd also like a pied-a-terre back home, and there's a possibility that # 2 son will go to uni in the UK, so a flat would be handy.
Jan 4th 2006, 3:14 am
#6
Joined: Mar 2003
Posts: 68,280
Re: US equity release for UK investment
Originally Posted by BritGuyTN
I actually did just the opposite, i.e. got equity out of my flat in the UK
I'm using it to purchase 7 duplexes that each have $6-700 a month +ve cash flow.resulting in $4000 a month to me in taxable income
I'm using it to purchase 7 duplexes that each have $6-700 a month +ve cash flow.resulting in $4000 a month to me in taxable income
Jan 4th 2006, 3:16 am
#7
Septicity
Joined: May 2004
Posts: 23,762
Re: US equity release for UK investment
Originally Posted by Ray
Peter Rachman returns.......
Hell Ray! You're old!
Jan 4th 2006, 3:20 am
#8
Joined: Mar 2003
Posts: 68,280
Re: US equity release for UK investment
Originally Posted by fatbrit
Hell Ray! You're old!
and I liked his girlfriend the infamous Mandy Rice-Davies
Jan 4th 2006, 3:21 am
#9
Homebody
Thread Starter
Joined: Jan 2005
Location: HOME
Posts: 23,182
Re: US equity release for UK investment
Originally Posted by Angry White Pyjamas
Make him rent his own or live in halls and work at McD's to pay for it. Kids of today dont know they're born ffs.
But I don't fancy sleeping on some dorm room floor when I go and visit the ROH, National Gallery, the Tate.............. and him
Jan 4th 2006, 3:31 am
#10
Homebody
Thread Starter
Joined: Jan 2005
Location: HOME
Posts: 23,182
Re: US equity release for UK investment
Originally Posted by fatbrit
How longs a piece of string? Will need some basic info to give pointers. Give as much as you feel happy with.
Is your US residence currently on a mortgage?
If so,
Is there a pre-payment penalty?
What is the value of the house?
What is the balance on the mortgage?
Or (if you don't want to say to the two above), give me the LTV instead.
What sort of loan is it? (e.g. 7-year ARM, interest only @ 5.2%)
Your credit:
How long has it been established?
How many lines are there on it? (e.g. 1 mortgage, 2 car loans, 2 credit cards)
Is your US residence currently on a mortgage?
If so,
Is there a pre-payment penalty?
What is the value of the house?
What is the balance on the mortgage?
Or (if you don't want to say to the two above), give me the LTV instead.
What sort of loan is it? (e.g. 7-year ARM, interest only @ 5.2%)
Your credit:
How long has it been established?
How many lines are there on it? (e.g. 1 mortgage, 2 car loans, 2 credit cards)
We have a mortgage that has another 12.5 years to run - good rate and no pre-payment penalties. There is plenty of 'spare' equity in the house. Good credit - no debts.
I have also PM'd you...
Jan 4th 2006, 3:39 am
#11
Mr. Grumpy
Joined: Jun 2003
Location: Nashville, TN
Posts: 3,100
Re: US equity release for UK investment
Originally Posted by Ray
Peter Rachman returns.......
You need to give me more credit! On a big picture level i'm quite tough but on a personal level i'm actually very nice and wouldn't dream of those kind of things - even if the law allowed it over here
Down here however, the rental income to property cost ratio is hard to ignore
General rule of thumb is that 8% cap rate for investments is OK. In this localility 11 - 12% is fairly easily achievable
Jan 4th 2006, 3:44 am
#12
Mr. Grumpy
Joined: Jun 2003
Location: Nashville, TN
Posts: 3,100
Re: US equity release for UK investment
Originally Posted by Elvira
We have a mortgage that has another 12.5 years to run - good rate and no pre-payment penalties. There is plenty of 'spare' equity in the house. Good credit - no debts.
I have also PM'd you...
I have also PM'd you...
both have advantages and disadvantages
heloc has a higher rate but is effectively a big credit card that is 100% tax deductible (right now anyway)
my personal attitude to investments would be to get an option arm mortgage tied to the MTA.
if you want you can pay interest only, 15 year AM, 30 year Am, or a negative AM (not good), but typically if you make a big prepayment in one year, at the end of the year it re-amortizes and results in a lower standard monthly payment
Jan 4th 2006, 4:29 am
#13
Homebody
Thread Starter
Joined: Jan 2005
Location: HOME
Posts: 23,182
Re: US equity release for UK investment
Originally Posted by BritGuyTN
you should be able to either refi and get a rate under 5.5% or get a heloc at .5% below prime
both have advantages and disadvantages
heloc has a higher rate but is effectively a big credit card that is 100% tax deductible (right now anyway)
my personal attitude to investments would be to get an option arm mortgage tied to the MTA.
if you want you can pay interest only, 15 year AM, 30 year Am, or a negative AM (not good), but typically if you make a big prepayment in one year, at the end of the year it re-amortizes and results in a lower standard monthly payment
both have advantages and disadvantages
heloc has a higher rate but is effectively a big credit card that is 100% tax deductible (right now anyway)
my personal attitude to investments would be to get an option arm mortgage tied to the MTA.
if you want you can pay interest only, 15 year AM, 30 year Am, or a negative AM (not good), but typically if you make a big prepayment in one year, at the end of the year it re-amortizes and results in a lower standard monthly payment
"an option arm mortgage tied to the MTA" sounds intriguing. I can see I'm going to get my financial brain in gear!
Thanks guys - I'm sure I'll come back with more questions!
Jan 4th 2006, 4:33 am
#14
Septicity
Joined: May 2004
Posts: 23,762
Re: US equity release for UK investment
Originally Posted by BritGuyTN
you should be able to either refi and get a rate under 5.5% or get a heloc at .5% below prime
both have advantages and disadvantages
heloc has a higher rate but is effectively a big credit card that is 100% tax deductible (right now anyway)
my personal attitude to investments would be to get an option arm mortgage tied to the MTA.
if you want you can pay interest only, 15 year AM, 30 year Am, or a negative AM (not good), but typically if you make a big prepayment in one year, at the end of the year it re-amortizes and results in a lower standard monthly payment
both have advantages and disadvantages
heloc has a higher rate but is effectively a big credit card that is 100% tax deductible (right now anyway)
my personal attitude to investments would be to get an option arm mortgage tied to the MTA.
if you want you can pay interest only, 15 year AM, 30 year Am, or a negative AM (not good), but typically if you make a big prepayment in one year, at the end of the year it re-amortizes and results in a lower standard monthly payment
My favourite mortgage is the one I got last year. It's a 15-year fixed in the lowish fives, interest only, with a balloon payment for the remaining principal at the end. There's no bloody escrow account with it, either! If you make a principal payment, the minimum payment decreases the following month. It's magic!
On the tax advantages you mentioned, there are three areas I'd like to expand on: 1) it's only advantageous with a sizeable loan so don't get carried away with it; 2) there have been mutterings in Washington lately about removing this perk -- so don't count on it; 3) the taxman balks at >100% equity loans.
Last edited by fatbrit; Jan 4th 2006 at 4:46 am. Reason: Can't count!
Jan 4th 2006, 4:58 am
#15
Mr. Grumpy
Joined: Jun 2003
Location: Nashville, TN
Posts: 3,100
Re: US equity release for UK investment
Originally Posted by fatbrit
My favourite mortgage is the one I got last year. It's a 15-year fixed in the lowish fives, interest only, with a balloon payment for the remaining principal at the end. There's no bloody escrow account with it, either! If you make a principal payment, the minimum payment decreases the following month. It's magic!
On the tax advantages you mentioned, there are three areas I'd like to expand on: 1) it's only advantageous with a sizeable loan so don't get carried away with it; 2) there have been mutterings in Washington lately about removing this perk -- so don't count on it; 3) the taxman balks at >100% equity loans.
On the tax advantages you mentioned, there are three areas I'd like to expand on: 1) it's only advantageous with a sizeable loan so don't get carried away with it; 2) there have been mutterings in Washington lately about removing this perk -- so don't count on it; 3) the taxman balks at >100% equity loans.
PM me details about the loan if possible please - I ******* hate escrow crap and the re-amortisation sounds intriguiing - is it available for investors?
I agree with your tax advantage points, people do get carried away with it but at least its something (for the time being)
