Buying your Florida villa with a Florida mortgage
Before you begin looking at property for sale in Florida you should arrange a mortgage so you definitely know your budget. If you hope to buy your Florida villa using finance then it is essential you make the right decision as to what type of mortgage to go for. There are both advantages and disadvantages to obtaining a Florida mortgage and you must carefully weigh them up against your own individual circumstances.
Buying property for sale in Florida with a Florida mortgage
Non-residents of Florida will not be able to borrow as high a loan-to-value (LTV) when taking out a Florida mortgage. It would be unusual for non-residents to borrow more than 70% to 80% of the value of your Florida villa and you will probably need to pay a deposit of at least 20%. The Florida mortgage will be secured on the property for sale in Florida you are buying, meaning your UK assets will not be put at risk in the event of default.
Most Florida mortgages are of either fixed or adjustable rates and are normally repayment loans, meaning you pay back both capital and interest. There has been a number of innovative mortgage products introduced in recent years with overseas investors in mind. When you buy a Florida villa with a mortgage, the repayment timetables available are generally over 10,15 or 30 years.
The minimum sum which you can borrow to buy a property in Florida is $50,000 and the maximum is $1,000,000 with credit rating and income taken into account. Interest rates vary but they are generally at competitive levels.
Advantages to taking a Florida mortgage to buy a property for sale in Florida
Buying a Florida villa or other property with a Florida mortgage is undoubtedly the best option for many overseas investors. The advantages include:
- You establish a US credit record making it easier to make major purchases in future.
- If you are renting out your Florida villa then you may be able to reduce your overseas tax bill by offsetting the cost of the mortgage against income received.
- A Florida mortgage may also be able to reduce the net value of your Florida villa, significantly reducing the inheritance tax payable upon death.
Disadvantages of buying a Florida villa with a Florida mortgage
You must also think about drawbacks to this option. Among the problems you may encounter when taking out a Florida mortgage are:
- Set-up fees which can add around 5% to the cost of your Florida villa.
- Florida mortgage rates are generally higher than those available in the UK.
- Lower LTVs mean you may have to meet a shortfall in funding from elsewhere when buying a Florida villa.
- The products available may not be as comprehensive and diverse as the range offered by UK lenders.
Think about your personal circumstances and whether a Florida mortgage is right for you when buying a Florida villa. If at all possible, obtain pre-approval before starting your search for property for sale in Florida.
