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Getting A Mortgage in the UK

Mar 2, 2008
Gradually falling from its dominance as a world provincial power the United Kingdom retains much of that power through the development of financial and insurance industries. The country works with an economic model that has come to be known as the Anglo-Saxon model , which is based on a free market, liberalism and low taxation. Given the United Kingdoms past industrial history it is a surprising evolution from coal and shipping to services as an economic base. In 2005, the countrys GDP was made up of 73 percent services, such as banking, insurance and tourism.

The development of such an industry sector has brought with it a level of sophistication and options that anyone doing business in the banking sector is advised to find a lawyer with experience in British banking. The fees involved with a transaction for a domestic property, let alone all of the other options are enough to make anybody cringe. If an international loan is desired, which is fairly common given the scope of the British banks and financial companies, the complexity can go one step further.

Suffice it to say that any type of loan can be arraigned within the British banking system. Currently, the following loans are available although they are only a beginning depending upon how you choose to structure the loan.



Self build

Equity release



Interest only

Bridge financing



The loan to value aspect of the mortgage is where options become a tangle. At this stage, with so many options, you and your lawyer will become very close. Generally speaking, the loan to value rate is determined by how much income you and or your spouse earn and how much the property you are considering is valued at. For the most part, 75 percent is a base level for most loans although they can reach 100 percent if conditions are met such as mortgage insurance.

Although the general rule of thumb, in most cases, is three times your yearly earnings the British mortgage market prides itself on taking every individual as a unique case with some cases of an individual writing a mortgage of five times his earnings occuring. Given the flexibility of the particular mortgage involved interest rates can vary from 4.44-5.35 percent depending upon the loan.

The term of the mortgage is fairly typical at 25 years although the average British borrower may tend to take a shorter term so as to lessen interest paid. Maximum age at term is 65 with most loans being made in Sterling.

As might be suspected documentation is looked at fairly closely in the United Kingdom. The minimum documentation required includes:

Last twelve months of bank statements

P60 or equivalent

Letter from accountant the tax has been paid

Three years of audited accounts if self employed

Certified true copies of passports

Proof of residence

Completed application form

Property documentation

Depending upon the mortgage loan you choose there are several fees that must be allowed for. Generally, the typical administrate fees need to be accounted for but you must make sure that the fees that you do not expect are also accounted for, and there are a lot of them. This is where the lawyer comes in. Make sure you take full advantage of his services so that penalties or late fees are not added in a mortgage environment that can become fairly confusing.
About the Author
Leo Fogarty is Marketing Director of the mortgage specialists Euromortgage. He is also a regular author for financial magazines, most notably Property Gallery Magazine in Ireland and is an expert on mortgages , remortgages , equity releases and overseas mortgages .
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