Looking to buy in Florida? Here's what you need to know about finance and mortgages
The USA has long been a popular spot for Brits looking to relocate or buy a second home abroad. Nearly 700,000 of us have moved there in search of the American Dream and Florida is a particular hot spot.
It is easy to see why so many people are drawn across the Atlantic. Not only do we speak the same language, but there are also no big cultural differences, meaning we can easily adapt to the lifestyle. Regular flights run to and from the UK, making it an accessible destination all year round.
In Florida, most people tend to buy in three areas: along the Gulf coast, the Atlantic coast and central Florida, close to Disney World. Orlando is another favourite because of its year round sunshine and outdoor way of living. Properties in Orlando have great rental potential as they are close to Walt Disney World Resort and other famous attractions.
It is relatively easy to purchase in the US – there are few restrictions on foreign ownership and they have a well-regulated property market. It can also be an exciting place to be when you get there.
In terms of obtaining finance, it would normally be from a US lender rather than an overseas lender. Unlike many other countries, there is not normally an age cap on a mortgage and the maximum mortgage term is 30 years. Mortgages in the US are also different in the sense that they are underwritten on any taxable income and assets at the time of application. This means that if the applicant can currently afford the repayments, they could be granted a mortgage for up to a 30 year term.
Lending is currently available with a maximum of 70% loan to value (maximum loan size $5 million) for the purchase of a second home in Florida. The current interest rates are starting in the region of 5.0% for a five-year fixed rate. The loan to value may be reduced to 65% if the property is purchased purely for investment purposes (i.e. buy-to-let), but the lending terms will be much higher.
Loan to values on a ‘condo’ (essentially a leasehold apartment) are lower than single-family homes by approximately 60% to 65%. A condo is normally either a multi-storey block of flats or a row of four or five terraced houses.
It is worth noting that condos have to be approved by the national mortgage association Fannie Mae. That is to say the financial management of the condo has to be solvent and certain ratios of occupancy have to be fulfilled, such as the balance between owner occupied, investment and buy-to-let.
Completing a mortgage can take up to 45 days, but will depend on how quickly the supporting documentation is received, plus the time for the valuation and legal work to be carried out. Closing needs to take place either in the USA or at a US embassy or consulate. Alternatively, you can use a notary from a country signed up to the Hague Convention with an apostille attached
All mortgages are subject to a client’s financial status and valuation and all will have their own separate lending conditions and setting-up costs.
A varied range of properties are for sale in Orlando, with 2 bedroom condos on the market at $190,000, 3 bedroom properties around $300,000 and 4 bedroom houses for $500,000.
Our thanks to AIPP member Simon Conn for this article – scroll down for more details about Simon.