A starter guide for advising on ex-pat BTL mortgages – Syms

It is estimated by the World Bank that around 5.5 million people born in the UK now live abroad – around 8% of the present UK population. According to DeVere, 23% of these moved primarily for work and career reasons. Many expats therefore, do not intend to stay away forever, and fully intend to return at some point in the future.

Even of people who have retired abroad, a significant proportion still want a base in the UK. This means some may buy and rent out a property they intend to live in when they return to the UK, some buy a holiday home they also rent out, or some opt for one or more investment properties.

This makes the market for ex-pat mortgages significantly larger than most people recognise – and these numbers are growing.

Switched-on

Lenders are switched-on to this market with more than thirty lenders prepared to lend to ex-pats in some shape or form.

There are often misconceptions regarding what is required. It is not a requirement of all lenders for example, that someone working overseas is employed by a multi-national company. Some lenders will also accept people who are self-employed.

While many brokers are familiar with applications for buy-to-let, many lenders will also accept applications for holiday homes and family residential dwellings for expat clients.

It is also a myth that lenders will only lend to ex-pats living in the EU, many lenders will provide mortgages to people living all over the world, which is crucial as the Institute of Public Policy says the most popular country for British ex-pats to reside is Australia with 1.3 million living there.

What do lenders need?

Typically, they want the applicant to have a proven clean credit history, as pursuing a bad payer is more problematic when they live abroad. Most lenders also want to lend a minimum of £100,000 as it is not cost effective to work with smaller loan sizes.

Not all lenders will apply the same rental calculations to a buy-to-let for an ex-pat as someone residing here however.

Rates and criteria for each lender vary greatly although rates can start at just 2%. As each applicant’s circumstances will differ, most lenders will look at each borrower on a case-by-case basis.

The positive is that this is a large and growing market and so the brokers that master it typically do well. Many expats are high net worth applicants with strong incomes, which can yield future opportunities and it is also helpful as some lenders will look at an ex-pat buy-to-let on an affordability basis when there are shortfalls in rental income.

For those new to this market there are specialist packagers that can guide you and your client through the process, so there is never any need to turn away those harder to place clients.