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Expat BTL Mortgage
Property prices in the UK have steadily risen and many see this as a good investment opportunity considering rental income can help finance the purchase. You may wish to purchase a buy to let property as an investment, but you are an UK expat living abroad so you may be wondering if it’s possible to get a mortgage loan in the UK, even if you are paid in a foreign currency. The good news is it is possible, even if you are classed as self-employed. Expats are considered as someone who is residing outside of the UK but holds a current UK passport.
We discuss this in more details in this article and how you can obtain a mortgage loan.
What are expat buy to let mortgages for?
To clarify, if you are an UK expat looking for an expat buy to let mortgage, you are a UK national, living abroad and looking for a buy to let mortgage on a UK property. If you are looking to take out a mortgage for a property that is not in the UK, you will require an overseas mortgage.
With rising house prices, buying a property in the UK is a great investment and you will have a home to return to when your overseas work contracts are finished.
Another reason to search for an expat buy to let mortgage is when a UK residential homeowner is looking to move overseas but wish to let out their UK home. In this instance, the borrower will be required to remortgage their residential property to a buy to let product to comply with rules and allow them to let the property out.
Expat buy to let mortgage lending criteria and requirements
For expats, lenders will look into your income, credit history and affordability as part of their assessment on whether to grant you a mortgage loan.
For your income checks, lenders will generally ask for proof of employment by asking for a copy of your employment contract. If you are self-employed, they will ask for up to date accounts which will need to be verified by an established accountant. Some lenders may stipulate a minimum income to be considered for a loan.
Some lenders choose to not lend for this type of market due to the exchange rate risks. If you are paid in a foreign currency, there is a risk of exchange rates fluctuating and although at times it can work to an advantage, it is a risk that needs to be considered carefully.
Lenders will check an applicant’s credit history to assess their creditworthiness. Any bad credit history doesn’t mean your completely void of being able to obtain a mortgage, but it can make things harder. If you have not lived in the UK for a while, you may lack any type of credit records which can be just as problematic. Having a UK bank account and especially if your income is paid into a UK bank account, would be highly beneficial.
Besides checking your personal circumstances, a lender will check the property you intend to buy and carry out a valuation before agreeing to a loan. You will be required to provide the rental income level you can achieve as your monthly rental income needs to be at least 125% – 145% of the monthly mortgage repayments. How much percentage depend on the lender.
You may find lenders will only accept certain types of properties for lending with expat buy to let mortgages. Most traditional houses and apartments tend to be acceptable.
Some lenders may only accept applications from expats living in certain countries and may not lend to expats living in some countries that they deem to be high risk. Countries which lenders choose to exclude will be different from lender to lender.
Gaining a buy to let mortgage as an expat can seem complex. Due to tighter requirements and changes in regulations, the mortgage market has shrunk and not all lenders are willing to loan for an expat buy to let mortgage, and it may seem confusing with which lender you should approach. You may wish to seek the help from a qualified mortgage broker who can use their experience and expertise to guide you to the right lenders for your personal circumstances. An independent mortgage broker will have access to a wide selection of lenders and products, both on and off the high street, including specialist lenders. Besides providing you with wider options, a mortgage broker will be able to assist with your application process to help you increase your chances of being accepted by a lender. Get in touch with us today if you want to discuss your mortgage needs.