You might be surprised at how easy it can be – if you approach it correctly
One of the top questions we are asked by expat clients at APW is about the mortgage process: how can someone living and working outside the UK invest in property and secure a good mortgage deal?
There are a number of areas where clients can self-assess for suitability, but the most important thing to remember? It’s not nearly as difficult as you think.
So, to help would-be investors understand the situation better, we’ve put together some crucial points to consider:
Links to the UK
In principle, anyone can seek and acquire a buy-to-let mortgage in the UK, and for British citizens it is particularly straightforward. This applies even if you are not currently resident there, but have lived there in the past.
EU citizens are next in line in terms of easy access to mortgages. For example, Prosperity and APW have a number of Dutch clients who have easily obtained mortgages for UK property.
Other nationalities outside the UK and Europe are in a slightly less prime position, but it’s not impossible.
Yes, this matters. A lender will look carefully at your credit history in the UK, if you have one. A credit history is built up through your use of loans, credit cards on one hand, and residency on the other.
Late payments against loan obligations will be recorded over time by the two credit agencies in the UK – Equifax and Experian – and you can check this record by requesting a credit score report. This data is used to credit a score: people are often surprised to find a late payment from fifteen years ago still recorded on their profile. However, such an occurrence will certainly not disqualify from you borrowing.
There is one thing however that will cause problems: a County Court Judgment, which a person will receive if they have defaulted on a debt – and resisted all attempts by reminder to pay it.
Residency is demonstrated over that period by years at the same address and lenders will look at whether you are on the electoral register as this proves a measure of residency in the country.
The British Electoral Register
The Electoral Register is a government record of eligible voters who are resident (or registered as being resident) at addresses across the country.
There is a perception that being on the Electoral Register is a must for getting credit. This perception comes largely from credit agencies who frequently refer to this in their criteria.
In our experience however, this does not make so much of a difference – if you’re not on the register, there’s no need to worry as this won’t disqualify you.
High Street Banks
The British High Street banks are well known to most people, and on their websites will have links to their mortgage products. High up on their list of lending criteria is that they will only offer to UK residents.
This can create the impression that mortgages are not available to those outside the country: but the reason for this is that they already have so much business coming from residents, they don’t need to pay attention to the expatriate market.
It doesn’t mean, however that you won’t be able to get a mortgage. For our clients we have looked at international banks such as Bank of China, Al Rahim and HSBC who are far more flexible in their lending criteria.
You’ll want to ensure that the buy-to-let mortgage that you get allows for the lowest possible rate for the longest possible time.
In House Mortgage Desk
When you purchase a property, make sure that assistance with a mortgage is included in the purchase so your investment can be completed with ease.
Prosperity and APW have an ‘in-house mortgage desk’ team who have been able to find mortgage solutions for a huge array of individuals. In fact, they like to claim that if they can’t find you a mortgage, no-one can!
Oddly, banks tend to prefer larger mortgages than smaller ones: the larger the loan, the more profit they can make. And this points to the key issue: lending money is ultimately how banks make their money.
Although we frequently hear of recessions and the tightening of lending criteria, the bank really wants to lend to you and thereby increase its bottom line. As banks operate within frameworks laid down by the Chancellor and the Central Bank, lending is what they do best – and what they want to do.
A mortgage is therefore a relatively straightforward procedure – just make sure you have the right assistance and support to help you through the process.