Expats finding it tough to get a mortgage for a UK property
A leading international mortgage expert has claimed that overseas buyers and British expats are finding it 'increasingly difficult' to buy property in the UK.
DeVere Mortgages says that tougher buy-to-let mortgage rules are making it hard for overseas buyers to be approved for the mortgage they need to purchase property in the UK - although seeking specialist advice can help.
Expats “being turned away by mainstream lenders”
In recent years, British expats and foreign nationals from Asia, Europe, the USA and Middle East have been keen to buy property in the UK. Overseas buyers view British property as a 'safe haven asset' and, due to the weakness of the pound, UK homes have become more attractive. However, according to a leading independent financial advisory firm, potential buyers are struggling to get the mortgage they need to buy in the UK.
Darren Mead, head of mortgages at deVere Mortgages, says: “In our experience these buyers, without seeking quality advice first, are finding it increasingly difficult to purchase property in the UK, often being turned away by mainstream, high street lenders.
“Expats have been typically deemed as ‘higher risk’ by UK lenders, even if they have substantial assets and a high salary. But now, due to the changing criteria, buyers are finding it more difficult, unless they work with mortgage advisors who specialise in expat home loans for those who live outside the UK. This is because more common lenders now require borrowers to receive a minimum of 145% of their mortgage costs in rental income. Previously it was 125%.
“This change to lender affordability criteria, could have potentially significant affects on the UK’s property market for expat buyers if they are not made aware prior to making a mortgage application," he adds.
Specialist lenders can help expats get the mortgage they need
There are a number of lenders who specialise in expat mortgages, and so it is not all doom and gloom for overseas buyers. As well as deVere Mortgages, who work with more than 200 UK-based and global lenders, there are companies in the UK who specialise in these types of deal.
Skipton International won Best Offshore Account Provider 2016 at the Moneyfacts Awards and the Guernsey-based lender has completed over £150m of expat mortgages. Skipton offers an online expat mortgage calculator which uses information such as property value and rental income to show customers the maximum amount they would be able to borrow, along with an estimated monthly repayment cost. It can also give a mortgage approval in principle.
Nigel Pascoe, director of lending, Skipton International, says: “This is an upgrade of the first mortgage calculators available for British expats. It’s designed to speed up the early stages of considering a mortgage, by giving customers a clear idea of what they can realistically expect to be able to borrow and pay back each month, based on relevant factors such as property value and rental yields.
“By giving an agreement in principle at an early stage, it allows buy-to-let investors to focus on properties that will fit their borrowing criteria, and it makes the whole process of purchasing a buy-to-let property in the UK a lot more straightforward.”