How To Get A UK Expat Buy To Let Mortgage

29-September-2023 14:22
in International
by Jennifer Stevenson
Expat buy to let mortgages in the UK

Getting an expat buy to let mortgage can be trickier than if you live in the UK - but it can be done. 

If you're a UK national living in another country, you may be trying to figure out how to finance a property back home.

Perhaps you're looking to keep a house you already own or purchase a new buy to let property - benefitting from a valuable slice of the UK property market and having somewhere to live if you return in the future.

But how easy is it to get a buy to let mortgage as a UK expat? 

It's true that many UK mortgage lenders are not set up to process buy to let mortgage applications from expats - they don't have the specialists in place. So, there are several things you need to know to avoid stress, get accepted and get yourself the best deal.

Skip to:

Can I get a buy to let mortgage as an expat?

How do I switch a residential mortgage to an expat buy to let?

Are expat buy to let mortgage rates higher?

What is the deposit requirement on a UK expat buy to let mortgage?

Eligibility criteria for UK expat buy to let mortgages

How to improve your chances of getting a UK expat buy to let mortgage 

Speak to an expert 

Can I get a buy to let mortgage as an expat?

Yes, you can. It's less straightforward compared to getting a buy to let mortgage as a UK resident, but it's certainly possible - even if you've been turned away by your existing provider. 

Renting out a property in the UK is a popular investment decision for many British expats. If you're already living abroad, you'll be looking to finance your property purchase on a buy-to-let basis from the get-go; this may include renting out to private tenants and students, as a holiday home or for commercial use.

The process of applying for a buy to let mortgage as an expat is more complex than if you were a UK resident. This is because mortgage lenders can find it more difficult to verify your income, credit history, and affordability status.

It's common practice to use a specialist expat mortgage broker to help you with your application. 

An expat mortgage adviser knows the market, and knows which lenders to contact for buy to let mortgages for expats in different countries. Some lenders specialise in expats living in European countries, for example, while others are better for US residents - it all depends on the complexities of your specific situation.

Note: Have you invested in a Personal Portfolio Bond while overseas? If yes – you need to know this crucial tax information.

Case Study - Watch our video below on how we secured our Hong Kong based client an interest only expat mortgage:

Related: NEWS: Are UK Interest Rates Going Down?

September 2023 Buy to Let Market Update

  • The BTL market has faced challenges over the last 12 to 18 months, with landlords finding it difficult to borrow due to stringent stress testing measures.

  • Previously, with a stress rate of around 4%, landlords could borrow significantly more. For instance, about a year ago, a basic rate taxpayer could borrow around £309k for a property based on the average UK rent of circa £1,300.

  • At 75% Loan to Value, that could buy roughly a £400k property, which you would expect to comfortably provide £1,300 in rental income. So it made sense, and the maths added up.

  • However, with stress rates spiking to up to 10.5% this year, the equivalent ’average’ borrowing capacity at this level plummeted to about £165,000, which you wouldn’t expect to fund a property that could generate £1,300 per month in income despite rent rises across the country.

Recent Developments:

  • Lately, there's been a slight ease as mainstream lenders are now applying stress tests under a 6% rate, which is a significant relief for landlords.
  • This adjustment may stimulate the BTL remortgage market and represents a positive shift for landlords amidst previously harsh market conditions.
  • This is coupled with lower buy to let mortgage rates in general, and also the recent news of Rishi Sunak scrapping the EPC requirements landlords.

Switching a residential mortgage to an expat buy to let mortgage

If you're moving abroad for any length of time, the obvious challenge can be what to do with your UK property. It may seem easier to sell, but there are many reasons why holding onto your property is a good idea.

Things might not work out overseas, you may need a place to stay when you come home for visits, and then there's the obvious value of holding onto your UK property investment. You can keep a foot on the property ladder, generate extra rental income and guard your financial ties with the UK which will protect your UK credit profile. 

Becoming a landlord while you're abroad doesn't need to be a painful process. You will need to switch your current residential mortgage to a buy-to-let mortgage, but with an expat mortgage advisor by your side, you can get the right finance in place to make your UK home a profitable asset while you're away.

Expat buy to let mortgages, specialist expat mortgage brokers, Clifton Private Finance

Are expat buy to let mortgage rates higher?

A UK buy to let mortgage is more expensive than a residential mortgage, even if you are a permanent UK resident.

Lenders consider buy to let mortgages to be higher risk as borrowers rely on rental income to cover the mortgage repayments. This alone can present an obstacle for anyone applying for buy to let finance, but if you live abroad, lenders are typically even more cautious!

To offset the risk, lenders will usually charge higher fees and rates. To what extent will depend on the strength of your application. 

Read our guide on protecting your UK credit score here

What is the deposit requirement on a UK expat buy to let mortgage?

The minimum deposit most lenders will require is 20% loan to value (LTV). The size of deposit you can afford to put down will significantly impact the interest rate and overall cost of your buy to let mortgage. 

One way to secure the best mortgage rates is to put down a larger deposit. If you have the funds to go to around 40%, you can expect to pay lower rates.

It's possible though to unlock some very attractive deals, by seeking the guidance and expertise of an experienced mortgage advisor who has access to lenders who specialise in expat mortgages. 

UK expat buy to let mortgage at domestic rates, a casy study, Clifton Private finance

Eligibility criteria for UK expat buy to let mortgages

Your application for an expat buy to let mortgage will be more successful if the lender can verify some key information about you.

The process can be a little bureaucratic, but a mortgage advisor who knows the expat lender market well will be able to guide you and help you get everything in order.

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Complex and foreign currency income

If you or your partner are earning in a foreign currency such as the US dollar, Euro, Yen or Dirham, rather than the British Pound, this could present a serious obstacle for many lenders. It's important to flag this from the outset and seek advice from a broker who will know the right lenders to approach in the first place.

Again, in terms of income structure, lenders can be unduly cautious of income from stocks and bonds, investment funds, overseas property and other investment vehicles. Of course, you'll want to utilise all your income sources to find the best mortgage deal possible, so it's best to go through a mortgage broker if you think this applies to you.

The country you live in

Although there are lenders offering buy to let mortgages to British expats, a large number will not lend to expats resident in specific countries.

For example, some won't lend to applicants living in countries considered to be 'higher risk', such as Kenya, Rwanda and South Africa, or any of the countries considered to be non-compliant with the FATF anti-money-laundering international task force, such as Bahrain, Bulgaria, Hungary or Seychelles. 

In addition, traditional lenders can't accept applications from expats living in Australia, as there's an intergovernmental treaty between Britain and Australia that prohibits lending to each other’s residents.

That doesn't mean that if you live in Bulgaria or Australia, you can't access UK property finance. But you will need a good broker to help you.

case study: expat buy to let mortgage for singapore expats, Clifton Private Finance

How to improve your chances of getting a UK expat buy to let mortgage

Getting the most competitive buy to let mortgage deal will generate the best return on your investment, and the most certain way to achieve this is by going through a dedicated expat mortgage broker.

  • A specialist mortgage broker working on your behalf will listen to what you need and get to grips with the details of your financial circumstances. They will then package your application so that it meets the requirements of specialist expat lenders, and will take it to the lender who will consider your circumstances most favourably.
  • By going through a broker, any complex or foreign currency income can be presented to lenders who will be more flexible and give you a mortgage offer that accurately reflects your affordability.
  • The process should be faster, and less arduous for you - and, more significantly - should result in a cheaper finance offer.

While you're here, don't forget to check out our complete guide to UK expat mortgages

Speak to an expert

Contact us to arrange an in-depth conversation with one of our specialist expat mortgage brokers. There's no charge, and no obligation, but we'll be able to tell you what we can arrange for you:

Through our market knowledge, we can deliver bespoke terms based on your requirements.  
Call us on +44 203 900 4322 to discuss your requirements.

Or you can book a free consultation with one of our expert advisors at a convenient time for you, below.

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