anyone bought a house ?

[woody4]

hi all

still looking into buying a house in florida have noticed the mortgage rates are high
in america. has anyone bought a house in florida with a english mortgage.

also what percentage of the loan would you say would be safe without
relying too much on the rent

woody

 

[Sue F UK]

Hi Woody

We are purchasing our own dream florida villa at the moment...closing next week!!!

It is virtually impossible to get a UK mortgage on an overseas property. I have heard that Abbey National is doing something but I think there are restrictions on the property that you buy. We used a very nice Florida mortgage broker who got us a fixed rate mortgage of around 7.5% for which we had to provide no income details at all. All you have to do is put down 30% of the purchase price and they ask virtually no qualifying questions at all!!
If you pm me I can give you her details if you would like more info.

Being new to the villa ownership business I am not yet sure if our villa will pay for itself - I certainly hope so!! It seems that the loan is only half the cost of running the villa though - you have to factor in utility costs, insurances, home association fees, licensing etc. etc. etc. The management companies tell you they will be able to get rentals for you but are unlikely to get enough to cover all these costs plus your mortgage. You have to be prepared to put in some work and get bookings yourself if you want to cover your costs totally.

Buying a resale house can also save you money over buying a new build house and you may want to consider this before taking the plunge.

I am sure some of the other owners who have owned for a while will be along soon with more worthwhile advice but feel free to pm and I will try to help.

 

[thefatman]

Sues right , a subsidery of the Abbey are offering Sterling remortgages to UK/US homeowners. As far as I know they are for remortgages only, and there are lots of criteria to be met, I looked at it and by the time I added in the set up fee's etc I was no better off. My variable US mortgage this year reduced to 6.5%.

Re rental income verses costs, unless you secure 100% rentals at high rates and work really hard at getting those rentals expect to fork out each month. Of course you could always remortgage your home in the UK and use the funds for a US purchase....but do you really want to carry that much overseas risk on your main home?

I've written this to you before, if you can't afford it 100% then I personally would not do it.....have a look at DVC, its far more affordable and a lot less hassle.

Many villa owners are feeling the pinch with the downturn after last years events, its not the first problem period either, several years ago during the tourist crime waves many folks lost rental homes due to lack of business. Your running costs will pretty much stay the same if your villa is occupied or full.
Also remember homebuilding is increasing at an unheard of rate compared to the UK, they say that just in the 192, Lake, Polk four corners area there are 12,000 licenced short term rental homes, and god knows how many unlicensed, all competing for the same business as you.

 

[vernon]

To break even you're going to need to have your house rented about 40-44 weeks of the year. It is unlikely your rental company will get you more than 25-30 weeks of that so you will need to find 10-15 weeks yourself. This isn't an easy thing to do. I worked on the principal that with a fixed mortgage your major cost is set per month/year while over time the effect of inflation will mean your earnings should rise. Sept 11 did kick a hole in this thinking over the last few months but longterm I think that is still sound logic. Your earnings SHOULD rise faster than your costs. It may take a few years for this to show in your bank LOL .

I did get the feeling that the housing market is beginning to pick up in Orlando. There are still some great bargains about, but there are now bargain hunters looking for the best deals. My reading is that in any area like Orlando where there is a lot of "vacation" property there will be a certain abmount of "forced" sales. These are due to divorce,death, redundancy and other unplanned for circumstances. In the time after Sept 11 there were NO BUYERS at all, coupled with the unpresedented boom in building it meant there was a lot of places available and almost no demand. This forced the building companies to add in a lot of "extras" into their sales and resales to be offered at big discounts. IMHO the market seems to have reached the bottom now and as summer approaches I think there will be a fair amount of demand.

I originally had a US mortgage, but I have increased my UK mortgage and paid off the US one. My thinking for this was
1) I can get cheaper funds here than my US mortgage was costing me and
2) I believe that Mssrs Blair and Brown will try to put the UK in a position where we can join the EU, this will need a fairly major cut in the value of Sterling against both the Euro and the $. For us to be in the position to join the euro £$ exchange rate will need to be about £1=$1.20 .
IMHO it's a good time to have assets outside of the UK.

 

[Sue F UK]

Hello again,

For what it's worth my experience bears out what Vernon is saying about the housing market. We started seriously looking in November 2001 and our broker got quite excited to see us - seems he'd been talking to the wall for a couple of months. There were masses of bargains around on resales especially. When our funds became available in March the house we originally wanted, which was a bargain at $220,000 has gone and we ended up buying the exact same house in April for $230,000. Still a good buy at that price as last year these houses were selling at $265,000.

The market is obviously starting to recover and will doubtless pick up speed in the summer when there are more potential buyers in Orlando.

My advice is - if your'e serious about this Woody don't leave it too long and do as much research as you can.

 

[fcmcargo]

Hi Sue,
Someone forwarded this post to me after I recently posted a question about buying a Florida Vacation Villa also. I live in New York and own other rental properties. The tax benefits to real estate investments are very great to USa citizens. ( I dont really know about UK tax laws). But the point is that a property can actually loose money and make you money through passive losses and passives gains. Anyway, was thinking of these Villas, because our family loves WDW and we go a couple of times each year and air fare rates are so low, why not as long as the management company can do a decent job renting your home.

How has your experience been so far ? Were you pleased in the way your management company rented your home? Was your expenses in line with your original expectations? Would you purchase another one?
Thanks, Tom

 

[Olaf]

Current 30 year mortage rates in this country are running around 6 percent. I don't understand why you guys can't get one of those. Am I missing something?

 

[athurstance]

Olaf,

We can't get those rates because they're for US citizens. There is a premium on the mortgage rates for foreign buyers which is why the idea of raising the money in the UK is attractive. It has its own pitfalls though as others have pointed out.
I have a US mortgage - the most annoying thing is the way it gets 'sold on' every now and again but I'm getting used to it. Otherwise it works well. It is fixed for 30 years - something you could never get over here which suits me as we have mortgages in the UK too and it reduces the hit of an interest rate rise.

I say buy the villa as a holiday home for your family. Expect to pay the mortgage and expenses and enjoy it. That way any booking is a bonus. If you go into it trying to make a profit or even break even you are looking at a very stressful life - just my opinion.

Angela

 

[Olaf]

Yeah, our mortages have been sold as well. Drives me nuts. The current bank that we're dealing with doesn't sell theirs as often. We bought our home last April and got a 7 percent loan. We're currently looking at refinancing at 6 percent and rolling the costs of the refinancing over into the loan ($4,000). It looks as if we're going to be able to lower our payment by about $200 a month. I think that's worth it.

How does buying a home over here vs over there compare. What is your interest rate right now. How much do you have to put down? To get a good rate, we generally have to put 10 to 20 percent down. When I look at our settlement statement I just about want to scream. All those stupid little charges.

Also, how do you keep people from stealing things out of your Villas? That would really get on my nerves.

 

[lisag1]

Steph,

We're looking at remortgaging our house at the moment and this is the cheapest I've ever seen.....

summary

Lender: Northern Rock

Product Type: Fixed

Initial Rate: 1.99% !!!!!!!!

Special rate period: 27 months

APR: 5.60%

This quote was from John Charcol online - www.charcolonline.co.uk

Lisa

 

[Olaf]

Wow! Lisa I'd grab that one! I have to call my loan lady today and see what she has to offer us. Ive seen a rate very similar to that offered on TV, but I don't know the particulars.

We really want to hold onto this house, perhaps rent it out when we leave. House values in this area have climbed steeply recently. I don't think they've gone as fast or as high as the those in the UK, but they're high nonetheless.

 

[Olaf]

Yahoo! Just got off the phone with the loan lady. We can lock in 5 3/4 30 year fixed rate, no points today. Just trying to get hold of DH to confirm this. Brings our payments down over $300 a month, definately worth the refinancing cost. Happy Camper!

 

[lisag1]

Hi Steph,

We just had our mortgage guy round too!! The problem with those really low interest deals is that they tie you in with high interest after the initial fixed term and they also have ridiculous redemption fees, one of them was £14,000 to get out!! We've just had a quote for a flexible mortgage whereby you make extra payments on your mortgage, if we make an extra payment of £300 per month we'll finish our mortgage in 12 years instead of 21!! So we'll probably go with that!! Is the US market the same as UK - a minefield!!!???

Congrats anyway on your super duper deal

Lisa

 

[Olaf]

Originally posted by lisag1
Is the US market the same as UK - a minefield!!!???

It depends on where you live Lisa. Yes, the Washington DC area is crazy. There was a guy up the street who put his house on the market FSBO (for sale by owner) this past Sunday, during the snow storm. He sold it for asking price within five hours. That's the problem around here, there's very little on the market and you'll end up bidding against five other offers. Sellers are frequently getting above asking price.

We went up against three other bidders last March when we purchased this house. The only reason we got it was that we allowed the owners to pull out of the deal within the first 60 days if they couldn't find a new house. It was nerve wracking. Values keep going up and up--it can't go on.

Here's the link to the home up the street that sold so quickly.

House

Also if you're interested in looking a real estate online, here's some sites.

www.forsalebyowner.com
www.realtor.com

Just pump in a zip code.