Bowman Offshore Bank Transfers on Top Tips on Securing an Overseas Mortgage

If you are thinking of purchasing a property abroad and require a mortgage, there are a number of aspects that need to be taken into account. 

There are also added advantages of utilizing the services of an independent bank – rather than one connected to the developer or selling agent - as they will check the legalities and carry out a valuation of the property, although they will not carry out a full in-depth survey unless requested. 

A lender will also ensure the property is good security for the mortgage that you require and to check the property has not been overpriced. 

However, when applying for a mortgage abroad there are many different underwriting obstacles you may come up against, according to Simon Conn, the UK’s leading overseas property professional and financial advisor (www.simonconn.com). Below are some common issues. 

Lenders tend to calculate how much an applicant can afford by only taking into account 30-35% of their total net personal income (after tax), to cover any existing liabilities plus the cost of the new monthly mortgage repayments. Liabilities include existing mortgages, bank and car loans, school fees, maintenance and alimony payments and credit card balances, which need to be cleared, even if it is a 0% interest deal. 

Net income is normally calculated from employed, pension or, possibly, investment income. In most instances, rental income on the new property will not be taken into account as part of the calculation. 

If an applicant has existing rentals, lenders may not take that income into account. However, if that rental income is from multiple properties and separate audited accounts are available, the net profit from that source may be taken into account. They are then likely to request a tax return to substantiate this additional income. 

A lower loan-to-value or a higher deposit will not affect the maximum amount you can borrow, as, since the world economic crisis, it is primarily down to affordability, but you may benefit with enhanced lending terms – i.e. lower interest rates, reduced setting up costs etc. 

If you are employed, it is ideal if you have been employed in that current job for at least 6-12 months. If it is shorter, a potential lender will need to know of any remaining probationary period, and you are likely to be asked for your latest CV showing your job experience/history. 

If there is a bonus, overtime or commission to be included, it is only likely to be included if it is guaranteed, or proof of a long-term track record is available. 

If you are self-employed, you will ideally have at least three years’ trading history with a minimum of two years’ profitable accounts (confirming both gross turnover and net profit for those years). There must be a full explanation for any drop in turnover/profit and, of course, any losses incurred. 

Please note, if an applicant has more than 20-25% shareholding, then they are normally deemed by a potential lender to be self-employed. If the self-employed applicant is based outside of the UK, their accounts must ideally be prepared by a recognized international firm of accountants to be accepted by a potential lender. 

However, if a loan or other expense is paid for by a business, then any of these costs may not affect a personal mortgage application. In this case, you must show at least 3-6 months’ history of the business account paying these expenses, but if you have any defaults, missed payments or CCJs, you are not likely to be accepted. 

The maximum age a mortgage can finish differs from country to country, and this ranges from age 65 to 75. However, the majority of lenders will ask for any proof of income to be received after the normal state retirement age. 

Please note, that by applying for a mortgage, it could slow down the sales process and it could be beneficial to apply for an “Agreement in Principle (AIP)” before finding a property, should the lender offer this option. With an AIP in place, it could be advantageous when negotiating with a seller. 

There may also be additional bank, local taxes and legal costs applicable to the cost of raising a mortgage. 

How much can I borrow? 

Overseas banks generally promote repayment mortgages rather than interest only. The information below - as at January 2018 - is a general guide to what is available in some of the current most popular countries. These are available on a case-by-case basis and are subject to a client’s overall financial profile and property valuation. 

Portugal 

Portugal has always been a popular country with Brits looking to buy abroad, with many recognizing its good value for money, nice weather and ambience when compared to other Mediterranean countries. It is not as stiflingly hot as some places as it is mostly on the Atlantic coast rather than the Med and there is also the Golden Visa programme and other tax benefits which are available to retired people. 

Mortgages are available up to 80% loan-to-value, although better lending terms are available for loans of 70% or less. The most popular areas include the Algarve and the Silver Coast north of Lisbon, but there has been more interest for Madeira and even the odd enquiry for The Azores. Interest rates are currently available from approximately 1.75%-2.00% above 12-month EURIBOR (the interest rate at which some European banks lend funds to one another, where the loans have a maturity of 12 months). 

Spain

Spain continues to be popular with its great weather, Mediterranean coast and laid-back lifestyle, whilst holiday home and investment purchases seem to be increasing. Mortgages are available up to 70% loan-to-value (better lending terms are available for loans of 60% or less). Interest rates are currently available from approximately 1.50%-2.00% above 12-month EURIBOR. 

France

As usual, France remains in the list of top countries. Transport links from the UK are excellent so it is easy to get to, and it offers a more relaxed lifestyle with fewer people and better weather. Mortgages are available up to 80%-85% loan-to-value (better lending terms are available for loans of 70% or less). Interest rates are currently available from approximately 1.50%-2.00% above 12-month EURIBOR. 

Italy

Certain areas are still of interest – such as Umbria & Tuscany, whilst Puglia and Sardinia are becoming more popular. Mortgages are available up to 60% loan-to-value and lender underwriting can be more onerous than other European countries. Interest rates are currently available from approximately 1.50%-2.50% above 12-month EURIBOR. 

The USA 

Interest in the USA has waned a bit since the Brexit vote and the exchange rate between the US dollar and the pound has led to a reduction in the number of potential purchasers. Popular areas include Boston, Fort Lauderdale, Miami, Orlando, Tampa, New York and other parts of the East Coast. West Coast destinations are always of interest, including San Francisco, Los Angeles and Seattle. Maximum loan-to-value rates are 70% (up to 75% in Florida) and interest rates are from approximately 4.50% fixed for 3 years, or 4.875% fixed for 5 years. 

Which currency?

Agents generally recommend that an overseas mortgage and the income used to service the mortgage repayments are in the same currency, thus avoiding exchange rate issues. This income received could come from rental received from the new property. 

In the past buyers have come unstuck by being misadvised to take out mortgages on, for example, Cypriot properties with a Swiss franc mortgage, but then exchange rates swung disastrously against them. 

Win on exchange rates

When buying property in another currency, exchange rate fluctuations will affect the purchase price and mortgage payments. Foreign currency exchange companies are usually a better option, according to Meyrick Green, an Account Manager at currency specialist Moneycorp (www.moneycorp.com). 

“A specialist can provide guidance and support so that you then understand fluctuations in the market and what they mean for you. Together with rates that are often much more favorable to those offered by high street banks, this could save you a lot of money on your deposit payment,” he said. 

Some currency firms also offer the opportunity to lock in exchange rates up to 18 months in advance. “The exchange rates are always changing, and that can make the cost of your foreign mortgage payments unpredictable. We have tools that can fix regular payments in a simple, cost-effective way,” Meyrick added. This suits those who like to take control of their budget as it offers protection from currency fluctuations. 

Top tips 

Ask questions about where a property has been built. For example, if it has been built on an area that should have been set aside for green belt or agricultural land, then the chances are there is a risk. Make sure you take advice from an independent, English speaking lawyer - preferably not from the same area as the property. 

In some cases, there can be problems with properties that have been constructed with the wrong permits, granted as a result of corruption, or with no permits at all. An independent lawyer should be able to save you the heartache of seeing your newly purchased dream home demolished. 

Consider planning permission and which licenses the property needs. Not having the correct licences could have an impact on what utilities you can obtain. 

Poor construction is a common problem. Always obtain an independent valuation, ideally from a professional surveyor expert in that country, even if it is a new property, as this will highlight any problems. New properties can sometimes be built in poor soil and with insufficient foundations, substandard building materials, or in dubious locations such as floodplains. 

One of the most important warnings when purchasing abroad is when it comes to contracts. It is common to only receive one contract in the local language, in which case, you must get a professional translation completed. If you are given two copies of a contract which include the original and a supposed translation, get the translation checked by a professional. 

If you are buying a property to rent out make sure you check what licenses are needed in the area as you may not even be allowed to rent your property out. Also, consider the cost of maintaining the property. Decide if it is worth employing a managing agent to look after it for you but do not forget to factor in their costs as it will reduce your profit. 

How often do you intend to visit the property yourself to ensure it is kept up to date? If it is a long-term let, think about the wear and tear on furniture and other fixed goods. 

Distance away – if the property is a long way from your main home, you may need to get there to sort out any major problems. 

Who is going to vet your tenants? If they damage your property, you must have suitable cover and a deposit in place. 

“Re-locating overseas permanently or just buying a holiday home abroad does not need to be a headache. Go through the proper channels and take advice from an independent lawyer and surveyor and your dream could be turned into a reality,” Simon Conn said.

Bowman Offshore Bank Transfers: Is it Dangerous to Transfer Your Offshore Money into the U.S.?

This is a question we receive often. With the implementation and enforcement of FATCA (Foreign Account Tax Compliance Act), the United States is increasing enforcement priority of noncompliant US account holders.

More than 100 countries and tens of thousands of foreign financial institutions have agreed to report US account holder information to the United States.

But I am not a U.S. Citizen?

This is a common misconception. The requirement for FATCA reporting is for the individual to be a US account holder – not a US citizen. In other words, whether you are a US citizen, Legal Permanent Resident, Visa Holder who meets the substantial presence test, or a former green card holder who was considered a long-term resident – you are generally considered a US person.

As a US person, you are required to report your foreign accounts and global foreign income to the United States (the United States taxes individuals on their worldwide income). With that said, the question generally arises as to whether a person can transfer their money from an offshore account into the United States, without issue?

Transferring Your Money to the United States

The fact of the matter is, the money overseas is your money. The IRS is not seeking to penalize you for the mere fact that you are transferring your foreign money into the United States (presuming the money was received legally). Rather, the United States is penalizing you for failing to report the existence of this money to the US government while it was overseas in a foreign account. 

There are many individuals who have a reporting requirement because the value of their foreign accounts/specified assets exceeds $10,000 in annual aggregate total on any given day — but do not have any taxable income. In this situation, there is a reporting requirement, but no taxation (since there was no foreign income earned). Nevertheless, they still must report the accounts properly. If the money was “earned” income and U.S. Taxes weren’t filed and/or paid to report the money, it can complicate the situation — but through voluntary disclosure a person can usually get into compliance relatively simply.

Depending on the facts and circumstances of your case, you may be able to avoid penalties altogether. The following is a summary of the basic requirements of individuals who were considered “US persons” and therefore may have a foreign account reporting and/or foreign income reporting requirement:

FATCA & Reporting Foreign Income – The Basics

Golding & Golding is a flat-fee, full-service firm; we are lawyers who assist international clients in reporting their offshore accounts to the IRS. Most recently, many of our clients learned about Foreign Bank Account reporting requirements when they received a FATCA Letter from their Bank, asking them to certify their U.S. Status by submitting either a W-9 or W-8 BEN.

Who Has to Report?

We have represented numerous clients worldwide with issues similar to yours:

– Expats who relocated overseas and did not know they had to report their foreign accounts.

– U.S. Citizens who live overseas and may or may not earn significant income, but have accounts in a foreign country.

– Legal Permanent Residents of the United States who relocate back to a foreign country but are unaware that they are still required to report the foreign accounts.

– Non-Residents who meet the substantial presence test and therefore are required to report foreign bank and other accounts to the US government.

The Basics

These are the most basic rules when it comes to foreign accounts and foreign income:

Foreign Income

If you are either a US Citizen, Legal Permanent Resident (aka Green Card holder or recently gave up your Green Card) or foreign resident who meets the substantial presence test, then you are required to report your worldwide income to the IRS. This means that even if you do not have any US-based income, you are still required to report your worldwide income (even if it is the type of income which is not taxed in your home country such as interest and dividend income in most Asian countries). And, if you have enough foreign income to meet the minimum threshold for having to file a US tax return, then you are required to do so even if it is based on your foreign income alone.

Foreign Accounts

If you meet the requirement for being a U.S. “Taxpayer” (even if you do not meet the threshold for having to file a US tax return), you are still required to file an annual FBAR (Report of Foreign Bank and Financial Accounts). The threshold is as follows: if at any time during the year, you have more than $10,000 in foreign accounts (whether the money is in one account or spread over numerous accounts), you are required to file an FBAR.

In addition, if you have significant amounts of money overseas, then you may also have to file additional forms such as an 8938 (FATCA Form) or 8621 (Passive Foreign Investment Company, which includes Foreign Mutual Funds along with as many other passive investments). There are many other forms you may have to file, but we determine those on a case-by-case basis.

Fines & Penalties

Unless you are criminal, chances are the IRS or Department of Justice will not be banging down your door to come drag you to jail. With that said, the fines and penalties can be very steep and depending on your particular circumstances, may include penalties upwards of 100% of the value of your foreign account. If the IRS believes you were willful (aka intentional), then they may launch a criminal investigation against you and the penalties and fines can get much worse from here, including Liens, Levies, Seizures…and worse.

Customs Holds and Passport Revocation

With the implementation of FATCA (Foreign Account Tax Compliance Act), the United States is heavily cracking down on offshore tax evasion and unreported foreign accounts in general. The IRS and US government have the power to both revoke your passport as well as possibly hold you at the airport “customs hold” to question you on the spot (usually outside the presence of your attorney).

Getting Into Compliance

Getting into compliance should be mandatory on your “to-do” list. Even though our firm, Golding & Golding, is based in Newport Beach, we represent clients worldwide. A majority of our clients live overseas in over 40 countries. We have helped numerous clients get into compliance and are regarded as one of the top Offshore Disclosure Law Firms worldwide.

To that end, there are three main methods of compliance:

(1) Streamlined Compliance

This program is for individuals who were unaware of any requirement to file an FBAR and/or report their income on a US tax return. The penalties under the streamlined program are significantly reduced and may possibly be waived depending on whether a person qualifies under the strict definition of foreign resident for offshore disclosure purposes.

(2) OVDP

This program is mainly for individuals and businesses who were willful, aka were aware they were supposed to report their foreign accounts but intentionally hid or kept the account/income information secret.

(3) Reasonable Cause Statement

This is not a particular program; instead, it is a method for getting to compliance while attempting to avoid any penalty. There are many pros and cons to this method depending on your specific situation, which must be evaluated carefully with your attorney before making a decision.

History of the Hay Group Singapore

More than six decades of helping organisasjoner work 

Hay Group was Founded in 1943 by visionary Edward N. Hay , der pioneered many of today's fundamental people and organizational management practices. 

For more than six decades, we've worked with many of the best and most Admired companies in the world, helping themself to manage is deres people and resources in new and transformative ways. 

We've worked in virtually every industry and every corner of the world. By helping our clients to succeed, we've built enduring relationships-many of which span decades. 

Throughout our history, we have the evolved in many ways. But our Principles to have remained constant as we strive udvikle new ways hjelpe people and organisasjoner work.