Living in Hong Kong? 4 Ways A British Expat Can Get A UK Mortgage

01-May-2018
01-May-2018 11:22
in General
by Admin

Buying property is a popular way to provide financial security for your future. And working in Hong Kong offers many significant benefits to British expats such as lower taxes, a thriving culture, world-class restaurants, and a bustling financial sector. But what if you are an expat living in Hong Kong who’s looking into buying or refinancing a UK property? In this article, Clifton Private Finance looks at the options available to you.

First, some things to consider…

Many high street banks are unwilling to lend to British expats

Securing a mortgage as a British expatriate living in Hong Kong can be troublesome for a few reasons.

Unfortunately, due to the limitations of the global banking system, your success in Hong Kong will not be reflected in your UK credit score. For example, having an inactive British credit card and not taking any loans in the last few years will mean that your credit score may have declined during your time away. And because banks have replaced human decision-making with computer algorithms, they often won’t approve your mortgage application.

Additionally, traditional lenders will usually require several pieces of supporting documentation. A proof of address and evidence of your income and your assets are two things they tend to ask for. In addition, lending money has become a lot more difficult for many institutions given the various different crackdowns by the Financial Conduct Authority and its predecessor since the Great Crash.

And what if you get paid in Hong Kong Dollars?

In 2014, the European Commission announced the Mortgage Credit Directive (MCD). This directive sets out the rules governing the granting of foreign currency mortgages and, in short, it made things a little more difficult for expats.

Here are two key points that the directive imposes: 

  • The consumer has the right to convert their mortgage into a foreign currency at any point, and,
  • Other arrangements are put in place to negate the risk of exchange rates falling dramatically to protect the consumer.

Now, they might sound like two positive changes but there’s a catch. These new entitlements mean that lenders now have to take into account the greater risk they face caused by currency fluctuations when they grant mortgages. Many institutions feel that this gives the borrower too much flexibility and the new regulations do not give lenders any reward for the additional dangers involved.

You can read about the MCD here.

Different rates for individuals looking for continuous employment in the UK

If you are looking into securing a mortgage because you intend to move back to the UK, then specialist brokers like Clifton Private Finance will almost certainly be able to help you find you a mortgage with a very competitive rate.

Through our network of lenders, we should be able to secure you several offers and we will be pleased to advise you on which option would be the most beneficial for you in the long run.

Large expat mortgages

We have previously been able to obtain a £1.3 million mortgage for a British expat who owns a business in Hong Kong. Not only do we offer mortgage services for lower-priced properties, but also, in many cases, we can offer much larger mortgage options – no matter how complex your financial affairs.

Click on the image below to read more about this case.

/case-studies/complex-income-million-pound-mortgage-for-uk-expat/ 

Here are the 4 different ways that we can help a British expat in Hong Kong can get a UK mortgage:

1. Purchase a UK property for residential purposes

Whether you are buying a second home or you’re planning to retire in the UK, you may need to acquire a residential mortgage.

All of the potential pitfalls that we previously mentioned apply with this option.

We take into account all of your different income streams and we can deal with currency exchange problems if needed. Once all of that is out of the way, what we’ll be able to offer you is essentially the same as any other residential mortgage. You need to decide how much you would like to borrow, what the length of your mortgage will be, and pay the deposit (which can be as low as 20%).

This can be done in one of two ways. You can either get a capital repayment mortgage or an interest only mortgage.

A capital repayment mortgage means that your monthly payment covers the interest on the mortgage and it also reduces the total outstanding balance on the loan.

An interest only mortgage means that your monthly repayments only cover the interest that the mortgage generates. You will have to come to an additional agreement about how you will repay the amount of the loan itself.

Additionally, we can source bespoke expat lending solutions for individuals who earn over £300,000 a year or who have a net worth of over £3,000,000.

With bespoke lending a mortgage can be structured in line with your individual circumstances. See here for a recent case study where we helped a HNW British expat working in HK to secure a £1.6 million residential mortgage so he could move back to the UK with his family to Oxford.

2. Purchase a UK property for investment purposes

Buying-to-let and Houses of Multiple Occupancy (HMO) are both common ways to invest in UK property for Hong Kong-based expats.

Over the course of 2017, the Prudential Regulatory Authority created new regulations for obtaining a buy-to-let mortgage. These new rules were brought in following concerns the Authority had over market lending patterns in 2015/16.

These new regulations changed the way that lenders process applications. In terms of the rental coverage ratio, traditional banks will now require landlords to have a rental coverage ratio of 145% for standard buy to lets and up to 170% for HMOs.

This rental coverage ratio is there to prove that you can cover the costs of repaying the mortgage, even when the property does not have any tenants.

Securing a mortgage through a traditional high street bank can be tedious and time consuming. At Clifton Private Finance, we offer tailored financial solutions using trusted specialist lenders which have a wider, more business-orientated outlook than mainstream financial institutions. This means that we should find you a lending plan that will give you a better interest rate than a traditional bank can offer with more favourable terms.

3. Refinancing existing UK residential and buy to let properties

Re-mortgaging your existing UK property will work well for many reasons.

You will probably have benefitted from both the capital appreciation in the value of your property and the reducing size of the principal of your mortgage having kept up with the repayments. The combination of both factors should produce a sizable pool of equity.

If you have a variable rate mortgage, you could be paying a higher interest rate on it than a re-mortgage that Clifton Private Finance can source.

We offer an independent residential refinancing service to expats. This service is for properties worth £150,000 or more. The term of the facility can last between 3 and 30 years and the service is tailored to meet your specific requirements. We can also take into account your investment portfolio, other held properties, and your pension funds when securing a finance facility for you, making sure that you benefit from both flexible lending criteria and the best interest rates. This service is available for both residential and buy-to-let mortgages.

The refinancing can be in either Hong Kong Dollars or Sterling (other alternative currencies are also available) and you can change currency when it benefits you. Our level of service does not differ because you are an expat.

4. Source development finance to buy land or property in the UK to develop/redevelop for investment purposes

Buying UK land can lead to a significant return on investment over time. This is because of the value that planning permission has on the open market, particularly to developers. Land that has already been granted planning permission is more expensive but please be aware that you cannot guarantee that planning permission will be granted on land that does not yet have it.

We offer finance solutions for development projects starting from £100,000. The terms can be up to 24 months for both simple and complex developments.

Because of our extensive network of specialist lenders, being an expat won’t affect your ability to secure favourable funding facilities through us. You can live and operate out of Hong Kong whilst going through the entire process. 

/expat-and-foreign-national-mortgage-case-studies/

Working with Clifton Private Finance

There are a range of UK specialist lenders that will work with British Expats who live in Hong Kong. These lenders will consider your various income streams, investments, and currency conversions into account when finalising the details of their offers. We can often generate pre-approval terms within 24 hours meaning that you won’t miss out on any potential opportunities.

If you are an expat who is looking to expand into the UK property market, call our finance team on Bristol 0117 959 5094 or London 0203 900 4322.

 

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