5 Top Tips For UK Expats Getting A Buy To Let Mortgage

09-August-2018 16:06
in Bridging Finance
by Jennifer Stevenson

You want to invest in the UK: you’re a UK national, this is familiar territory, so it ought to be straightforward – right?

Not necessarily: the regulatory landscape has changed, and there’s a limited number of lenders working in this market. A specialist broker will find you the finance that will make the sums add up for you, and steer you around the pitfalls.

Here are the five top tips from our case files:

Get a separate survey and valuation of the property: it's money well-spent

Uncertainty in the market (don’t let’s mention Brexit again) means that no-one’s very clear what a property’s worth.

We’re seeing an increasing number of down-valuations by lenders on the proposals we take to them, and the impact on your yield calculations can stall your purchase.

Obviously you won’t just take the estate agent’s word on the value, but don’t look to Zoopla for verification. Criticism of Zoopla’s “secret formula” algorithm for valuations is rife, not least because the “Refine the estimate yourself” functionality allows owners to up-value their own properties.

In this case, the client was making a more realistic estimate than Zoopla. But if you don't havee the local knowledge, pay the £400-£1,000 it may cost to have a valuation done by a surveyor qualified to asses rental yields.

Run your own credit report at the outset

This is one that can come back to bite you – particularly for expat clients who’ve been out of the country and assume their record must be clear. Not only can lack of activity affect your UK credit rating (keep using a credit card on your UK account), but an adverse rating may be lurking there.

Tell your broker your long-term plans

They may impact on what you’re seeing as just an isolated financial decision.

You may just be looking for five or 10-year finance on a BTL. But is it possible you might move back to the UK during that time and will want to live in the property? Some lenders will accommodate that, but we need to know so that we can approach the right lender on your behalf.

Give your broker everything

We need to see the whole picture – even though we may not need to give it all to a lender. Your accountant may not understand our process, and things may have changed since you last needed to access finance.

In the current regulatory climate, underwriters are inquisitive about everything. Be upfront with us about debt. Be prepared to provide details about the source of your deposit. (It’s perfectly acceptable for it to come from India. But you may need to provide a few months’ statements on your Indian bank account.)

If you have more than four properties the entire portfolio needs to pass a rental stress test (you can’t just offer your most profitable property as surety).

Example mortgages for HK expats

If you have your portfolio financing on a spreadsheet, your broker loves you. We need to know the loan-to-value (LTV) for each property, and the terms of their financing (are any of them coming to term and may revert to a higher interest rate).

Consider whether you should be using a limited company to manage your property

As a mortgage broker we’re often telling our clients they should get independent financial advice on this. We’ll be working to get you the best deal on terms and rates, but we don’t want you to be ignoring significant tax advantages.

Contact Clifton Private Finance 

+44 203 900 4322

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