Selection of lending institutions
China: Basically, we choose large state-owned banks because they usually have an advantage in loan interest rates. And generally speaking, in the case of new houses, some banks cooperate with developers as loan banks.
Britain: There are many lending institutions in Britain to choose from. In addition to the common major banks such as Barclays and HSBC, there are hundreds of independent loan consulting institutions with loan qualifications, and there will be various loan product portfolios for you to choose from. These independent lending institutions, which are different from banks, often have advantages in interest rates and loan quotas.
Tips: If you choose a lending institution to buy a house in the UK, you can ask several more comparisons. I suggest that you can choose 1-2 big banks +2-3 independent lending institutions for comparison, so that you can roughly know how many loans you can get, get AIP as soon as possible, and look at the house as soon as possible.
Loan quota ratio
China: At present, the loan amount in China is about 60-70% for the first suite and 40-50% for the second suite. Then calculate the monthly repayment amount according to the loan amount and compare it with the average monthly income of the family. Generally speaking, the monthly income is twice the monthly repayment amount of cover. Moreover, in terms of interest rates, banks have a floating interest rate of 10%-20% according to their own conditions. Generally speaking, the four major banks will have an advantage in interest rates.
Britain: The loan amount in Britain is 4-5 times the annual income before tax. For owner-occupied housing, the loan ratio can reach up to 90%, and the investment housing can reach up to 85%.
Loan process
China: Take buying a second-hand house as an example. The bank needs to interview the buyer and the seller first, and both parties provide relevant identity certificates, real estate licenses and other materials. Then the bank comes to the door to check and ask the evaluation agency to issue an evaluation report, and determine the loan base according to the evaluation report and the transaction amount. Then the loan amount is determined according to the income and down payment of the buyers.
Britain: First get AIP from financial institutions, then choose your favorite house according to the amount of AIP and your down payment ability, make an appointment to see the house, meet with the owner, and ask a professional house inspection agency to issue a house inspection report, including house valuation and house quality report. The bank will determine the final loan amount according to the house inspection report.
Tips: If the valuation of the house inspection report is too different from the AIP price, the bank may refuse the loan. Then at this time, it is necessary for the intermediary between the buyer and the seller to negotiate to modify the transaction price or prove that the price difference is reasonable.
Loan fund flow:
China: After the loan is approved, the bank will directly call the seller's account.
UK: After the loan is approved, the loan funds will be transferred to your lawyer's account for real estate transaction. After the contract is exchanged, the funds will go from your lawyer's account to the other lawyer's account and then to the seller.
Tips: All real estate transactions in Britain are completed by lawyers, who will do due diligence, contract drafting and contract review to make the whole process more complete, rigorous and compliant.
Flexibility of loans:
China: Domestic housing loans are generally divided into two types: equal principal and interest (same monthly repayment amount) and average capital (fixed monthly principal, decreasing monthly interest and decreasing monthly repayment amount). And in most cases, I have been in this bank until the end of the loan.
Britain: Britain can choose fixed interest rate or floating interest rate. The advantage of fixed interest rate is that the interest rate remains unchanged, but the disadvantage is that the interest rate is relatively high. Floating interest rate is to follow the change of market interest rate, and the loan interest rate may change at any time, so the monthly repayment amount may be different. In Britain, you can also choose to pay interest only, that is, the domestic form of paying interest on a monthly basis and repaying the principal at maturity. The advantage is that you only need to pay interest every month, and the repayment pressure is small, but you have to bear the pressure of paying the principal at one time when it expires.
Tips: It is generally not recommended that you only choose interests. On the one hand, the pressure of maturity is too great. On the other hand, banks are usually allowed to cross the state only when buying investment properties, and self-occupation is generally not accepted. Similarly, there will be cases of changing banks in Britain, that is, if the interest rate of this banking institution is not suitable, it can be changed to another bank.
In addition, generally speaking, many banks or lending institutions will provide loans on the premise of requiring borrowers to buy insurance. On the one hand, it will protect the interests of banks or institutions in the case of borrowers, on the other hand, it will also protect the borrowers' families.