How do international mortgage lenders differ to UK banks?

If you’re looking to finance a property in Europe with a local bank, you may be wondering how international mortgage lenders differ to their UK counterparts. Regardless of your experience in your native country’s property market, international mortgage lenders—and indeed, the property market in general across western continental Europe—can be a very difference landscape. To prepare you for your purchase, we’ve compiled this short guide, detailing the differences in international mortgage lenders’ attitudes and what you can expect from European finance.

Interest rates

The Euro Interbank Offered Rate (EURIBOR) is currently in negative figures, meaning it’s incredibly cheap for European lenders to borrow capital. Accordingly, they need other ways to generate profit, as mortgage lending is not making up their margins in any significant way. Accordingly, many European banks have a much larger emphasis on wealth management—one of the reasons a European lender are much more likely to insist on assets under management (AUM).

Property prices and their implications

I’ve found that loan to value (LTV) can be a point of contention for my British clients, so this is an expectation I try and manage for my clients. The UK property market has been historically strong and shown year on year capital growth, so lenders can confidently agree to high LTV mortgages with the expectation that the property will increase in value. Conversely, European properties have not shown this capital growth, so it is more challenging to get a high LTV mortgage without placing significant AUM.

Therefore, just because you have been able to secure a 90% LTV on your British mortgage, you may struggle to achieve this in Spain. Furthermore, interest-only loans are much less common in Europe; again, this ties into a lack of confidence that the property will increase in value.

As a side note, during the application process your property will need to be valued. In my experience, valuations can often come back worse for wear in European locations. Spain is notorious for this, which can cause problems during the mortgage application process. Likewise, we often deal with unusual European properties such as French chateaus, which are difficult to value accurately.

Cultural differences

Purely on a cultural level, it’s important to recognise the different attitudes towards how business is done around the world. UK borrowers may find the working culture of some international mortgage lenders different to what they have experienced previously. Some clients can find this frustrating; things may move more slowly, or may appear to be less methodical, depending on the attitudes taken by bankers in your home country.

It sounds obvious, but the language barrier is also an issue! Many native English speakers may speak French or Spanish to a good social level, but transacting business in a foreign tongue is outside the scope of many linguists. This is where myself and my team can add real value; myself and my Co-Head of Enness International have both lived abroad, and conduct business in our various languages on a daily basis. If you’re hoping to get a UK mortgage for overseas property because of a language issue, rest assured we can assist you with this. We have offices in London and Monaco, so we can assist you from a variety of locations, too.

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