| International Financing of Real Estate Combined Loan To Value (CLTV) Some international banks who operate internationally provides home equity loans on it's list of approved countries and capital cities where they operate. They provide mortgage financing across different countries on an aggregate basis. Equity that is built up in one country can be use to finance the purchase of another property in another country without the outlay of cash; a no money down scheme. As long as the combined loan to value ratio is maintained and the properties are used as collateral the banks are happy to provide the loans. Example: US$ US$ US$ Country A Country B Total Value 500,000 350,000 850,000 Loans (outstanding) (250,000) (150,000) (400,000) Equity 250,000 200,000 450,000 Assume that an international investor has the above portfolio in country A & B and he intends to purchase another one in country C for US$400,000. The current CLTV is 400000/850000=47%. A further loan base on a CLTV of 70% for the combine portfolio can be obtained from the bank. Example: US$ US$ US$ US$ Country A Country B Country C Total Value 500,000 350,000 400,000 1,250,000 Loans (outstanding) (250,000) (150,000) (400,000) (800,000) Equity 250,000 200,000 0 450,000 The CLTV is 800,000/1,250,000 = 64%, below the threshold permitted by the bank and the amount of (400,000) X 30%) = 120,000 will be granted to make the down payment for property in country C. International banks do also provide foreign currency loans to the investors as well; with the ability to switch currencies once a year without additional charges. With this financing strategy, countries and capital cities that are listed on the banks loan portfolio are chosen at the outset as investment targets. This strategy provides the flexibility of cross collateral of real estate holdings across international boundaries. |
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