Expat BTL mortgage
Liz Syms, CEO and Founder of Connect Mortgages
According to various lenders and brokers’ reports, the expat BTL mortgage sector is experiencing substantial growth. In shedding light on this burgeoning market, Liz Syms delineates how brokers can embark on their journey in this domain and highlights the key criteria that lenders are currently emphasising.
The World Bank estimates that approximately 5.5 million individuals originally from the UK now reside overseas, constituting roughly 8% of the current UK population. DeVere’s findings suggest that 23% of these expats relocated primarily for work and career-related motives. Interestingly, many of these expats harbour the intention of returning to the UK at some point in the future, indicating a transient nature to their residence abroad.
Even among those who have retired in foreign locales, a significant cohort desires a home base in the UK. Consequently, some opt to purchase properties with plans to reside in them upon their return, while others invest in holiday homes that can also be rented out.
This multifaceted approach contributes to the expat mortgage market being more expansive than commonly acknowledged, and 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 expanding 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, with over thirty financial institutions poised to extend loans to individuals residing abroad in various capacities.
There exist common misconceptions surrounding the prerequisites for securing such loans. Contrary to popular belief, not all lenders insist on applicants working for multinational corporations abroad; some are also open to considering self-employed individuals.
While most brokers are well-versed in handling buy-to-let applications, it’s noteworthy that many lenders are also receptive to requests for 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. In fact, numerous lenders extend their mortgage services to individuals living across the globe. This is especially significant given that the Institute of Public Policy reports Australia as the favoured destination for British expats, with a sizable 1.3 million individuals calling it home.
It 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 substantial 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.