Obelisk Private Finance is part of the internationally renowned Obelisk Group, specialists in global property markets. Obelisk Private Finance provides clients with comprehensive financial solutions, including complete mortgages, remortgages, equity release and private finance solutions. Obelisk Private Finance offers a truly independent finance service.

Obelisk Private Finance has a highly professional team led by Director, Ken Thorkildsen who has over 20 years experience in the UK financial services market. Obelisk Private Finance offers a fully transparent service and through its close relationship with worldwide lenders, is able to provide clients with an extensive range of financial tailor made products. All financial processes at Obelisk Private Finance are modelled on those used within the UK financial services market.

Overseas banks have standard criteria to assess borrowing applications. These vary depending on the country and the bank concerned, but are usually calculated using a combination of a percentage of the applicant’s net income and a percentage of the value of the property. In some countries, but not all, potential rental income can also be taken into account.

Generally, banks will lend up to 80% of the property’s value (loan-to-value) and never more than the purchase price. This is subject to the applicant’s affordability level calculated on net income.

Net income is income after taxes have been paid and must be sufficient to cover all credit payments in your home country, such as mortgage and loan payments, plus the new mortgage amount. For example, if your net income is £2,000 per month and the agreed percentage is 50%, then £1,000 per month must cover all your outgoings plus the new mortgage.

This depends on where you buy your overseas property. Within Europe, rates are controlled by the European Central Bank (ECB) which influences the rate at which European banks offer funds to each other. This is known as the Euro Interbank Offered Rate (EURIBOR), which is also the benchmark for mortgage interest rates.

In Europe, the EURIBOR interest rate has, historically, been lower than the UK LIBOR rate (the UK’s equivalent of EURIBOR). As a guide, in June 2008, the 12 month reviewable EURIBOR rate was around 5%, while in the UK, the 12 month LIBOR rate was around 6%. Banks in Europe usually add an extra percentage on top of the EURIBOR rate, anything from 0.5% upwards, depending on the lender and the country.

For example, interest rates may total 5.5% in Spain (EURIBOR plus bank percentage), whereas in Romania, this may be between 7% and 8%. Each bank will have its own rates and you should ask your Finance Manager to provide details of the mortgage product.

When the single European currency was introduced in 1999, the European banks decided that it was necessary to establish a new interbank reference rate within the Economic and Monetary Union. It is sponsored by the European Banking Federation (EBF) and the Financial Markets Association (FMA) and represents the interests of some 5000 European Banks. EURIBOR is the rate at which euro interbank term deposits are offered by one prime bank to another and rates are published daily at 11.00 CET for spot value.

LIBOR (London Interbank Offered Rate) is the rate at which banks offer funds to each other, in marketable size, in the London interbank market. This is the most widely used reference rate for short term interest rates and is compiled with the British Bankers’ Association (BBA) in conjunction with Reuters and is released to the market shortly after 11.00 London time each day.

Mortgages can be repaid earlier than the agreed term. However, banks may charge you a redemption penalty, which can be as high as 5% of the amount borrowed. In established markets, such as Portugal and Spain, laws have been introduced to cap the amount at 0.5%. For example in Spain, the maximum penalty is 0.5% of the amount if the mortgage is redeemed in the first 5 years, and 0.25% thereafter.

An interest only mortgage keeps monthly payments low but will not reduce the amount borrowed. Repayment mortgages cost more in monthly repayments, but the amount borrowed reduces each month. Property investors generally prefer interest only mortgages so that they can keep payments low, particularly if they plan on selling the property within say, 5 years. For property investors, the amount reduced on a repayment mortgage may not be significant enough to warrant the higher repayments. However, if you prefer a lifestyle investment and do not plan to sell for say, 7 years, a repayment mortgage is usually the best way forward. In some countries, interest only mortgages are not available, so always obtain advice from your Finance Manager.

The maximum amount depends on the country and the lender concerned and is subject to the applicant’s financial status. Generally, banks lend up to 80% of the value of the property and never more than the total price of the property.

You can opt to release equity from an existing property. This involves taking a further advance from your current mortgage lender and has a number of advantages:

• Known credit history which speeds up loan process
• The loan can be tailored to your requirements and may be more flexible

Some countries and lenders allow the deposit to be financed from the full mortgage if it is intended for an off plan property.

Yes, some countries allow the fixing of mortgage payments from 1 year onwards.

UK banks generally will not lend on an overseas property because they have no jurisdiction in that country and are unable to secure a charge on the property or have a valuation to their own standards. Often mortgage brokers in the UK will push clients towards remortgaging their existing property in the UK. Exercise caution with this option - it may not be advisable to remortgage your main residence to raise the total amount for an overseas property.

Before you make a decision, look at the overseas mortgage option, which may have its tax advantages, especially if you are letting your property and receiving rental income. This way you can easily offset your rental income against your mortgage repayments.

In most countries this is not compulsory, but it is always advisable to insure any large amounts that you borrow - otherwise your debt may be transferred to your family or the property may be repossessed if payments are not kept up to date.

Some banks in some countries allow a percentage of rental income to be included when assessing the mortgage application. Rental income must be proven with a tenancy agreement and bank account details.

A mortgage in Swiss francs or Japanese yen may be cheaper at present than the equivalent euro or sterling mortgage on a monthly basis, simply because interest rates in these countries are lower. This means that borrowing money in these currencies will have lower interest payments. However, a mortgage in a foreign currency (i.e. not the same currency as the country where the property investment is situated) carries higher risks because of currency fluctuations. With proper forward planning, these risks can be minimised, although foreign currency mortgages are generally recommended only if you have experience in property investment.

Banks do want to see proof of declared income with a tax return, P60 or audited accounts. Some countries offer a non-status mortgage - usually at a lower percentage loan to value - which is essentially a mortgage which is granted without proof of income.

For a standard mortgage, banks may require that you provide a credit report.

Yes, but the documents will need to be translated into English or to the language of the country concerned. Always ensure that legal documents are translated into your native language before signing them.

Initially, you submit details to your Private Finance Manager who will make a preliminary assessment of the application. Once that is done, he will ask that you provide a completed application form together with supporting documents, which will then be sent to the bank concerned. Initial approval may take a couple of weeks and the full process depends on both the lender and the country concerned.

More and more banks are offering equity release products. Check with your private Finance Manager.

This depends on the country concerned and whether foreigners are permitted to buy property and/or land in their own name. In some countries, such as Bulgaria, you may buy apartments but you must set up a company if you wish to buy land or property with land. This is usually organised by your lawyer as part of the purchase process.

In most countries you must declare any income received in that country, which includes rental income. Rates vary depending on the country concerned.