Buy to let mortgage or BTL mortgage

Buy to let mortgage or BTL mortgage are for landlords interested in buying a property to rent it out in the future. Rules for Buy to let mortgages are similar to regular mortgages, but there are some key differences that you may need to consider. The main difference is that your Buy to let loan will be secured against the property’s rental income, so if you default on repayments, then the bank can repossess and sell off the property. This means that you should make sure that you have enough money saved up to cover any shortfall between what you owe the lender and how much they get from selling the house. If this happens, you could end up losing both the home and all of your savings! In addition, buy-to-let mortgages usually have higher interest rates. This is because a typical mortgage lender assessed more strict affordability rules in the case of Buy-to-let mortgage products. It is also the main reason that the choice of lenders and mortgage rate could be reduced in such type of loan application. The next question arises: What is the best approach for a BTL mortgage loan in the UK to follow. The best approach is to contact a known experienced mortgage broker who can help you find a suitable mortgage deal. 

Post Topics – Expat Buy-to-let Mortgages

What are expat buy to let mortgages for?

Expat buy to let mortgage lending criteria and requirements

Next steps


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 a 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 detail in this article and how you can obtain a mortgage loan.

What are expat buy to let mortgages for?

To clarify, if you are a 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 the 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 are 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 record, 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.

Next steps – Buy to let mortgage 

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.

FAQs – BTL mortgage

Which lenders offer buy-to-let mortgages for first-time buyers?

Many lenders are offering buy-to-let loans for new borrowers. When choosing a lender, the main criteria is affordability; however, other factors such as interest rates and fees also play a part. Lenders vary greatly, so it’s important to research each one thoroughly before applying. It’s always best to speak to a professional mortgage adviser or broker about what suits your individual situation.

Can I get an interest-only buy to let mortgage as an expat?

Yes! Interest-only mortgages allow you to pay less than the full amount of the mortgage upfront. This means you don’t need to put down a deposit until you start paying back the money borrowed. However, this comes at a cost because there is no repayment during the initial period. Once the term ends, then you must begin making regular payments towards the total sum owed.

Can I get an expat buy to let mortgage with bad credit?

Many expats struggle to obtain a home loan due to their poor credit history. If you do have a low credit score, you might still qualify for a buy to let mortgage, but you could face higher costs. Your lender will consider any previous defaults, missed payments and arrears when assessing whether or not you meet the eligibility criteria. They may even require proof of payment plans and debt consolidation. In this case, the best approach is to contact bad credit mortgage lenders who may approve your loan application. 

How long does it usually take to apply for a buy to let loan?

The time to complete an application depends on how much information you provide and the number of documents required. Some lenders ask applicants to submit additional documentation after submitting their original application. For example, a lender may request copies of utility bills, bank statements and tax returns. Other lenders may ask for more detailed information such as details of rental income, property valuation and expected rent increases.

What is an expat buy-to-let mortgage?

An expat mortgage allows overseas homeowners to purchase residential properties that they intend to live in themselves. These include houses, flats, apartments and land. Expatriates often choose to invest in UK real estate because of its stability and relatively lower prices compared to other countries. As well as benefiting from cheaper housing, expats enjoy the benefits of living abroad without having to give up their British citizenship. To know more about the expat mortgage and applciation process, you can contact our team at Ltd.

Is my current salary enough to afford a buy to let mortgage as an expat?

Maybe or may not, but you need to contact a financial advisor before starting your application for an expat mortgage. Although, affordability criteria depends on your monthly repayments. Monthly payments depend on the following factors.  

• How big your mortgage is

• What type of property do you own

• Whether you plan to use the equity generated by your investment to fund another project

• Any existing debts you owe

• Your personal circumstances – e.g., if you have children, where you work and how old you are

What are the acceptable deposit sources for an expat buy to let mortgage?

You can borrow against either:

1) The value of the house; or

2) A combination of both cash and assets.

If you want to borrow against the value of the house, you should look for a seller finance option. You can also consider borrowing against the equity in your home. Equity lending requires some form of security which includes items like title deeds, guarantees and insurance policies.

How much deposit do I need for the UK buy to let mortgage as an expat?

Deposit requirements depend on what kind of property you’re buying. Generally speaking, there are two types of deposits available:

1) Stamp duty; and

2) Land Registry fee.

Stamp Duty: This applies only to newly built homes. It covers the cost of stamp duty paid when transferring ownership of the property.