Various lenders’ and brokers’ reports indicate substantial expat BTL mortgage sector growth. Liz Syms explains how brokers can start in this market and emphasise the key criteria lenders focus on.
The World Bank estimates that around 5.5 million individuals from the UK live overseas, about 8% of the UK population. DeVere’s findings suggest that 23% of these expats moved mainly for work and career reasons. Many of these expats eventually intend to return to the UK, highlighting a temporary aspect of their residence abroad.
Even retired expats often want a home base in the UK. Some buy properties to live in upon their return, while others invest in holiday homes that can be rented out.
This multifaceted approach expands the expat mortgage market more than commonly acknowledged. The trajectory indicates a continual upward trend in these numbers. As the allure of investing in properties from abroad grows, brokers can tap into this market by understanding the unique needs and considerations of expat clients.
Expat BTL Mortgage | Switched-on
Numerous lenders actively engage in the expat BTL mortgage market. Over thirty financial institutions are poised to extend loans to individuals residing abroad in various capacities.
There are common misconceptions about the prerequisites for securing such loans. Contrary to popular belief, not all lenders insist on applicants working for multinational corporations abroad. Some lenders also consider self-employed individuals.
Most brokers handle buy-to-let applications well. Many lenders are receptive to financing holiday homes and residential properties for expat clients.
Dispelling another prevalent myth, lenders aren’t limited to granting mortgages solely to expats residing within the EU. Numerous lenders extend mortgage services to individuals living across the globe.
The Institute of Public Policy reports that Australia is the preferred destination for British expats, with 1.3 million individuals calling it home. This underscores the expansive reach of lenders in catering to the diverse locations where expats choose to settle.
Expat BTL Mortgage | What do lenders need?
Generally, expat BTL mortgage lenders prefer applicants with a proven track record of maintaining a clean credit history, particularly when dealing with individuals residing abroad, as pursuing delinquent payments in such cases can be more challenging. Additionally, most lenders have a minimum loan requirement of £100,000, as handling smaller loans is often deemed less cost-effective.
It’s important to note that not all lenders use the same rental calculations for buy-to-let properties owned by expats instead of residents within the country.
Interest rates and eligibility criteria can vary significantly among lenders, with some offering rates as low as 2%. Since each applicant’s situation is unique, lenders typically evaluate borrowers on a case-by-case basis.
The positive aspect of this market is its substantial and expanding nature, providing lucrative opportunities for brokers who specialise in it. Many expats seeking loans are high-net-worth individuals with significant incomes, opening up potential future opportunities. Additionally, some lenders assess expat buy-to-let properties based on affordability, especially when there are shortfalls in rental income.
For newcomers to this market, specialised packagers are available to provide guidance and support throughout the process, ensuring that even clients with more challenging profiles can be accommodated without needing rejection.
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