“How do overseas lenders calculate what I can borrow and when should I get advice?” Kevin Macadam, from Overseas Mortgage Broker gives us a guidline on what the overseas lenders look out for…

Overseas lenders calculate what you can borrow based upon affordability. Each lender has its own set of terms but in general, they all work to similar guidelines.

These guidelines hinge in the main on two questions:

• Can the clients prove their income?
• What is the client’s debt to income ratio (DTI)?

If you cannot prove your income then the mortgage will be declined. Overseas banks confirm affordability and have never embraced self-certified mortgages. This is probably why a number of them have weathered the credit crunch better than their counterparts. Proof of income if employed will be via payslips and end of year tax figures and if you are self-employed then by providing two years accounts.

Most lenders work on debt to income ratio. This is effectively, the percentage of income, which is used to service debt. The ratio differs from country to country and from lender to lender. .

In Egypt for example the DTI tends to be 40%. So in the case of a client who has a net income per month of £3000.00, the clients new overseas mortgage payment plus their existing monthly debt payments including any existing mortgages, loans or credit card payments must not exceed £1200.00.

Let’s say you have a mortgage payment of £600, a monthly credit card bill of £100 and your new overseas mortgage will be £500, then in this instance you would be approved by the overseas bank.

However, if your existing monthly debt payments are £1000 then this would exceed this ratio because the total would be £1500 and the lender would decline the case.

So “How do I propose to finance my overseas property purchase?” should be the first question you should ask yourself before signing anything.

Armed with that little bit of information you already have an idea as to how an overseas bank will view you and how successful your mortgage application is likely to be.

When should you get advice?

Do it early as the starting point to the buying process.

If you arrange the finance first then you’ll know that a property is in your budget, that you qualify for a mortgage and can safely put in a formal offer.

To find out more about financing your overseas property you can email Overseas Mortgage Broker or give them a call on 0843 315 5888.