Foreign and international buyers of Manhattan New York property can obtain mortgage financing through two sources:
(i) US lenders
(ii) Overseas lenders at the foreigner's home country
US Lenders
The major US banks no longer provide financing to foreigners. However, certain niche banks still provide foreigner financing. The downpayment requirement is usually much higher and interest rates are higher as well relative to those provided to borrowers who are US residents.
Overseas Lenders
This is an option as the lender is from the foreign client's home country or region. Hence the foreign buyer will be more familiar with the documentation terms, mortgage structure etc. Essentially it's a bank at the foreigner's home country providing an international mortgage. Again, very few financial institutions provide this but there are niche players.
In our experience with clients from Asia - Hong Kong, Singapore, Malaysia - this option provides a mortgage product that is similar to the mortgage products they are used to. Interest rates are lower and tend to be variable. But that's fine with our clients from Asia who are more familiar with variable rate mortgages and loans anyway.
Financing from Asia is similar to the yen carry trade strategy popular a few years ago. The yen carry trade was where the yen, with it's extremely low interest rate, was used to acquire and fund projects with a higher return. Effectively, an interest rate arbitrage strategy because funding from Asia tends to be cheaper. The main risk is foreign exchange fluctuations. Hence, the currency that funding is provided in is very important.
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Wei Min Tan is a real estate agent and investor focused on investment property in Manhattan, New York. He can be reached at tan@castle-avenue.com
Disclaimer: The above is not a qualified opinion or representation. Speak to your mortgage or home loan professional for qualified advice as individual situations vary.
1 comment:
Settling up in any country other then the native one gets very difficult for average people in terms of finance. In these conditions if they are provided foreigner loan, then it would be really very helpful.
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