Year-round sun, a great lifestyle, and a place where we can go for more than 90 days without a visa – Florida has much to offer British buyers. The Florida market is strong, but you can get a lot for space for your money compared to many southern European locations.
Yes, there was bad news when the US dollar reached parity with the pound last week but at the time of writing it’s up to 1.11 and further good news is that there are some things you can do to mitigate the weak pound.
1. Get a mortgage
Minimum currency exposure by getting a mortgage, even if you have the full sales price in the bank. Experts suggest getting the smallest mortgage deposit possible which is typically 25% of purchase price so you send over a relatively small amount over from UK to USA rather than 100% of the property’s value.
Borrow the maximum amount on the mortgage, says Zoe Attword of Homes of America Realty Group. “Ensure the mortgage that you choose has early repayment options. Take advantage of the fact that some have no penalties, or low penalties, after first two years. You can pay down your mortgage back when the exchange rate improves.”
In Florida there is no language barrier in arranging a mortgage, and loans in the USA are calculated over 30 years and so the interim monthly payments are lower; not exposing the investor to greater risk in the interim.
2. Use a currency exchange company to make your money go further
When you send over your deposit you can save money but also use their expertise to help you monitor the rates for paying down the mortgage. “With continuing volatility in the currency markets, it's never been more important to minimise the cost of your dollars,” says Robin Haynes, Director of A Place in the Sun Currency.
“As well as saving you up to 3.5% compared to the banks on any given day (over £5,000 on a typical $200,000 purchase), you can get some up-to-the-minute guidance to help you decide when to secure your rate. You can also use tools, such as a fixed and guaranteed exchange rate in advance, to make sure you aren't exposed to a nasty surprise should the Pound drop further before your completion amount is due.
3. Earn rentals in dollars to pay off the mortgage
If you rent out your property when you aren’t using it, this will help pay off your mortgage. With Florida offering year-round rentals, this is easier than in highly seasonal locations.
“Use dollars to pay in dollars,” says Zoe Attwood. “We’ve helped many property investors use a mortgage and shown them how to use the rental income to pay off the loan within two to five years.”
But she advises that a carefully chosen rental property will be more successful at doing this than a home chosen in the wrong area: again, expert advice can save you money.
4. Gain from capital appreciation
Florida prices have been resilient, and the US is not facing the same economic headwinds that the energy crisis is causing within Europe. Investors in Florida can be comforted by the high capital yearly appreciation of property - 78% in the last five years, says Zoe Attwood. “Florida has low conveyancing costs, thus adding to the value of the investment. There are also tax breaks on income earned you get with a US based mortgage on your Florida property.”