UK expatriates are offered a five-year fixed rate remortgage BTL product, for £300,000+ loans at a 3.99% interest rate, or at 4.49% for loans over £100,000. Skipton customers can also release equity based on a reduced pay rate.
The Guernsey-regulated bank already offers an existing portfolio of buy-to-let mortgages, and has reduced the fixed application fee for all remortgage products to £999, which includes valuation and legal costs with no further product fee.
In principle decisions can be provided over the phone and the bank says that remortgages can be processed in as little as 16 days from receipt of application.
Ian Gray, senior partner at Kinnison, thinks that specialist lenders are offering expat focussed products because the market allows for higher rates: “Specialist lenders like building societies don’t have the clout of big banks to buy money in, so they lend from their own savings book. And because their funding model is quite traditional, they have to find a niche in the market to charge a higher rate.”
“We’re seeing specialist lenders offering products for expats because it’s a market where you can charge more.” Gray continued, “There are a few more players in the market, and these few players are really taking in a huge margin — because there isn’t much competition and expats know there’s not much else to choose from.”
“The normal high street lenders are still not engaging because their appetite for risk is still extremely low after the credit crunch, and there’s still enough demand for normal domestic mortgages which are lower risk,” Gray added.
The market for international mortgage arrangements saw a host of changes in 2015, when measures to tighten up the largely unregulated market were introduced in the European Union Mortgage Credit Directive (MCD).
Despite this, according to Moneyfacts, the number of expat BTL mortgages has increased from 105 in April 2016 to 191 this October.
Shaun Church, director at Private Finance, thinks this trend is due to both the capacity and willingness of smaller firms to invest in the international mortgage market: “The main reason is that if you look at the lender, they’re either challenger banks or smaller building societies. Smaller organisations are more flexible in terms of their approach — for a large multinational bank to implement a system that’d adhere to MCD, the returns on balance is probably not worth it. A smaller society can implement a system much more quickly, so it’s more worthwhile and can be done with a decent return.”
“In short, they’re a bit more willing, and a bit more able.” Church added.
Jim Coupe, managing director at Skipton International, said: “British expats continue to look towards UK property as a good long term investment and we aim to make the process of securing a mortgage as simple as possible, with good customer service at the heart.”