What does the UK and US mortgage process look like?
Both the UK and the US operate under a highly regulated system with a broadly similar approach in relation to the assessment of an individual or entity looking to acquire residential real estate. Professional advice and guidance should be sought to ensure a streamlined application process.
What type of initial questions will be asked?
Clients will be asked to provide a financial profile and an overview of their wealth, including soft facts such as family and marital status, as well as any future aspirations and goals.
We will ascertain property parameters, deposit and budget requirements to include tax and any associated costs such as legal fees and property improvements.
Preferences will be discussed around attitude to risk, for example, certainty of payments versus flexibility. We will obtain a clear understanding of a client’s cash flow and repayment profile requirements.
What are the timescales for approval?
From the bank’s perspective, some are experiencing service level delays due to the current pandemic. Average timescales for application to offer for employed “vanilla” clients are taking between 2 to 4 weeks however, we have achieved an offer in 4 days where an e-valuation has been used.
For self-employed or complex applicants, the process can be more drawn out due to the potential structure of the income profile requiring manual underwriting and an in-depth analysis of cash flow, liquidity and in some instances, contracts.
Highlights for the UK:
- Loan to Value: 85% is the new 90%
- Service levels for some lenders are heavily delayed
- Physical valuation dates are causing longer than average processing times
- Stamp duty consideration has caused increased application numbers
- Financial profile needs to be in order. Lender credit score cards are more restrictive than ever
- Whilst 90% rates are available from a limited number of lenders, 80% rates are currently proving to be the most attractive being at their lowest in recent history
Highlights for the US:
- Loan to Value: 65% is the new 70%
- With rate reductions and homeworking, average processing times have vastly increased
- US aliens or non-citizens, tax payers or visa holders are experiencing increased delays
- Mortgages are available in all States. Home owner taxes differ greatly between States for instance, New York and Florida
- Flexibility of products is greater than the UK market with longer committed terms in both the adjustable rate and fixed term mortgage
- Interest only is available at a slight spread premium
- Liquidity and income post completion are key underwriting criteria
If you’d like to speak or meet with Chris Evans call him at 07515 283544 or click here
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