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Local buyers of British property may consider Lloyds TSB for one-stop mortgage financing, which will save them having to negotiate with overseas banks to secure a housing loan.

Lloyds was the first to begin offering this service in Hong Kong, about 17 years ago.

Its overseas residential property finance service is available for properties in Britain, Canada, the United States, New Zealand and Australia.

The benefit to potential borrowers in Asia is that all credit evaluations, approvals and administration are undertaken at the company's Asian offices.

It is possible to get what Lloyds calls a 'decision-in-principle', usually within two days, provided all necessary documentation is included.

Because these procedures are all carried out locally, the company is in a better position to assess a potential borrower's application.

'We are the specialists. This is our core offer and not a peripheral service,' says Stephen Richards Evans, regional chief executive.

He adds that Lloyds' experience, flexibility and professionalism translate into many repeat customers.

Some of the advantages of a Lloyds overseas mortgage include competitive pricing; the availability of currency switching between US dollars and the currency of the country where the property is located; up to 100 per cent financing; highly flexible repayment methods including investment-linked options; and no penalties or additional charges for early repayment or letting.

Customers also get a credit-line service at no extra cost.

Lloyds currency switching offers borrowers the option of drawing down a loan in the currency where the property is located but allows a switch to payments in US dollars.

This means that if there is an opportunity to reduce costs because the US dollar has gained on the New Zealand dollar, for example, the borrower can make loan repayments with greenbacks. This option is not commonly available elsewhere, says Mr Richards Evans.

A good rule of thumb is to match the currency of one's assets with that of one's liabilities, says Lloyds.

Borrowers can also arrange for up to 100 per cent financing for an overseas property. This facility depends upon additional security, which could be property in any of the countries where the company provides overseas mortgages.

In effect, it allows borrowers to release embedded equity, says Mr Richards Evans.

Funds and other investments managed by Lloyds TSB Group companies can also be used as security.

The following are some practical tips for would-be buyers of property overseas.

Borrowers should be wary of a number of things, not the least of which is the interest rate. Lloyds cautions that if the rate appears too good to be true, it probably is.

Borrowers should make sure that interest calculations give the bottom-line cost since there are several ways to calculate interest - monthly, six-monthly or annually, for example. A rate advertised at 7 per cent a year might turn out to be more than 8 per cent in real terms.

Another important question is fixed versus floating interest rates. A fixed rate may appear more attractive and is often offered with an eye to securing customer loyalty. But fixed rates are set for relatively short periods and often include considerable early repayment penalties. These could be anywhere from three months' interest to as much as a year's.

Interest rates may be higher if the property is to be let and if the bank is lending to an overseas-based borrower.

Borrowers should also look at costs such as hidden charges. Most lenders charge an arrangement fee of either a flat rate or a percentage of the advance. Some brokers charge a sourcing fee for finding a suitable loan facility.

It is wise to check if these are upfront fees or whether they will be charged later, perhaps upon one's formal acceptance of the loan.

Legal fees of both borrower and lender are usually borne by the borrower. It is likely there will also be a valuation fee.

Life insurance to cover the loan amount and building and/or content insurance may be mandatory. These are good to have, but there are many products on the market and borrowers should assess which plan is most suited to their needs.

Other miscellaneous charges of which a customer should be wary include a revaluation fee for applications for an additional loan and fees for transfer of equity, deed handling, inspection or safekeeping, conversion of repayment method, approval of building insurance (if not arranged by the lender) and duplicate statements.

Clients should ask the potential lender to list all charges and penalties in writing and always remember to get quotations in print.

Lastly, because various loan types can help minimise an investor's rental income tax exposure, he or she should discuss the various products thoroughly with qualified banking representatives to identify the most appropriate option.



British bank pledges home-loan flexibility for buyers abroad