What you Need to Know About UK Expat Buy to Let Mortgage Opportunities

*The UK is no longer part of the EU and therefore while the information in the following Blog was correct at the time of writing, it would be best to gain more current information.

The United Nations statistics estimate over 4.5 million British Citizens now live overseas and since the 2016 *EU referendum, over 100,00 Brits have emigrated. So, it appears many more will continue to follow and as a result, the Expat buy to let market is currently booming.

One of the many considerations’ expats experience when planning their move abroad, is whether to purchase a buy to let property or let their UK home while overseas. Maintaining a foothold in the UK can provide much-needed security and is understandably a popular choice for those looking for financial investment potential.

The number of expats looking for buy to let opportunities in the UK is increasing, yet there continues to be a comparatively small number of lenders offering an expat mortgage.

Even as a British expat, you can expect further challenges when trying to secure a mortgage if you’re not residing in the country.

Why are British expat mortgages difficult to secure?

Whilst the process is not dissimilar to that of a normal buy to let mortgage, there are certain rules that can complicate and hold up the process.

In general, exchange rate fluctuations must be taken into account and this can lengthen the overall application. Furthermore, enhanced due diligence can be expected given the increased risk to lenders.

Among those Expats facing extra hurdles with their mortgage applications are those residing in the EU and Australia.

Recent changes to *EU rules mean that individuals paid in a foreign currency must come under closer during the mortgage assessment.

In Australia, the inter-governmental treaty which prevents lending between residents is clearly a huge restriction that needs to be addressed, especially considering around 33% of British expats live in this part of the world.

Some of the other challenges can include the following:

Overseas Address

Often, one of the biggest difficulties encountered is when applications are submitted prior to customers moving abroad. This is because most lenders will require evidence of the intended address to progress the mortgage application.

Residing Country

Many UK expat mortgage providers have restrictions in place for specific countries and in some cases a list of countries which they will not even entertain accepting mortgage applications for. However, there are some that don’t have these kinds of rules, so it’s well worth undertaking some thorough research to find the best expat mortgages, that suit your needs, before making any commitments.

Financial Restriction

A common cause for failed expat mortgage applications can be when customers have insufficient income. This is particularly the case when it comes to applicants living overseas on short to medium-term work contracts.

Moreover, rental payments need to be paid in a currency that is on the lenders approved currency list.

Solicitor Restrictions

Some lenders are keen to keep communications running smoothly and as a result, may have certain specifications on the size of the firm and more commonly that they must be UK-based. Therefore, this increases the potential for holding up applications in some situations.

Applying for an expat buy to let mortgage

As you can see, applying for this kind of buy to let mortgage is already far from simplistic and why you should expect applications to take around 6 to 8 weeks to process.

You can also expect to pay slightly higher interest rates and some of the more general requirements are more rigid, such as a minimum deposit of 25 percent and that the rental income exceeds the mortgage payments by a ration of 145 percent if the mortgage rate was 5.5 percent.