Is it hard to buy an apartment in London?

How do we arrange financing to buy an apartment in Paris or London?

• How do we arrange financing to buy an apartment in Paris or London? Hi! We are non-EU residents and will like to buy an apartment in either Paris or London. We plan to use the apartment for a few weeks a year, when visiting Paris and/or London. For the rest of the year, the apartment will be available for short-term rentals, e.g., to tourists. We don't have bank accounts in the UK, France, or any other european banks. We also do not have bank accounts with any global investment or commercial banks, e.g., Goldman Sachs or Barlays. We do have good credit (state-side), good jobs (state-side), and a nice home (servicing mortgage). We plan to put a downpayment of about 20%-33% for the apartment we plan to purchase in Paris or London. Our questions: How can we finance this apartment? What types of banks should we enquire at? What are the logistics involved to secure financing? What type of documentation is required? Do we need to put up collateral, and in what form? What types of fees and interest rates should we expect in such financing? We appreciate your insights to any of these questions. If you have previously done something similar, we will love to hear your experiences too. Thanks! :-)

• Answer:

  Banker, American, living in Europe since 1997 and I have owned property in Portugal while residing in England (my primary country of residence). I'll try to address your original points the in same order you raised them. "We are non-EU residents and will like to buy an apartment in either Paris or London." Ok, you'd better decide which country first, as since you'll (most likely) be borrowing either Sterling or Euros and paying back Dollars (unless you can arrange a mortgage product where you pay back Dollars even though your debt is in a foreign currency), you'd essentially be taking a view wrt the US Dollar and the foreign currency you're borrowing in. If the US Dollar craters vs the currency you've borrowed in your monthly payments (debt service in finance speak) will spike. Borrowing in a foreign currency to finance debt http://www.thebigmoney.com/articles/judgments/2009/06/29/can-iceland-be-saved. So such activities are clearly very, very risky, even in the best of circumstances. "We plan to use the apartment for a few weeks a year, when visiting Paris and/or London. For the rest of the year, the apartment will be available for short-term rentals, e.g., to tourists." While this looks nice on paper you'll probably find this won't matter much to the bank as you will be the ones responsible for paying back the mortgage. In other words, this is a personal mortgage, not a business mortgage you're looking for. If you structured this as a business transaction, with an appropriate business plan then the lender would look at this forecast, short term cash flow in the appropriate manner. As is this doesn't really count. "We don't have bank accounts in the UK, France, or any other european banks. We also do not have bank accounts with any global investment or commercial banks, e.g., Goldman Sachs or Barlays. We do have good credit (state-side), good jobs (state-side), and a nice home (servicing mortgage)." The US side credit history and income won't help much here as when one moves to the EU their credit history effectively starts over. What would help you out is a retail account with a global bank. I'm with HSBC London myself, and they definitely offer cross border mortgages, however within the EU. Not sure how non EU would count here. I did notice that HSBC recently started offering cross border products, http://www.marketwatch.com/story/hsbc-plans-new-cross-border-mortgage-product-for-early-2008 Maybe direct your attention south of the border? "Our questions: How can we finance this apartment? What types of banks should we enquire at? What are the logistics involved to secure financing? What type of documentation is required? Do we need to put up collateral, and in what form? What types of fees and interest rates should we expect in such financing?" As mentioned, I'd suggest asking HSBC (or an equivalent bank) first. Logistically, purchasing a flat in Lisboa wasn't much different for me than acquiring a flat in London, and additional documentation was minimal as the account relationship was already established. Minimal down payment ("collateral") for a (rental / investment) flat in Lisboa was 25% cash, but this is highly variable (local property market value forecasts, individual credit rating, the lenders local book, etc). Interest rates ran about 2.5% above my primary home mortgage rate.