*This content is brought to you by Sable International. They are London-based specialists with offices in Johannesburg, Cape Town, Durban and Melbourne. If you are currently a non-resident in the UK and are looking to get into the property market there, their expertise could prove invaluable to your investment success.
By Ian Henning*
Ever since the financial market crash of 2008, trying to secure a mortgage in the UK as a non-resident has become a lot more difficult than it used to be. Lender options have reduced, and the few that remain have tightened their criteria. Navigating these waters can be tricky on your own, as the criteria from lender to lender can differ vastly. However, there are lender options available for non-residents to secure a UK mortgage, and what’s more we’ve learned how to make this process as simple as possible.
To secure a UK mortgage as a non-resident, you will (in most instances) need a lender who is based offshore in either the Isle of Man, Jersey, Guernsey or a private bank. Most offshore lenders will require a large deposit, with the majority only lending up to 60% loan-to-value (LTV). This means you’ll have to stump up 40% of the value of the property up front, which can be quite a sum when purchasing a property. There are a few lenders that will go up to 75% LTV, but they are the exception, not the rule. Further, when looking at new build or off-plan properties, lenders may restrict you to 50% LTV, which is not ideal.
Offshore lenders will also look to dual underwrite your mortgage and will do this by assessing the property’s rental income as well as your personal income. This will mean that for most lenders, it is paramount for you to provide proof of income via payslips or tax returns. They will also consider your personal circumstances and all your liabilities. If you have a number of properties or high levels of debt, offshore lenders may be unwilling to lend to you.
The British passport exception
If you are not resident in the UK, but hold a British passport, you are likely to find yourself in a stronger position compared to a non-resident without a British passport. As a holder of that invaluable maroon passport you could be able to use an expat lender who’s lending criteria is slightly more flexible than traditional offshore lenders. If you find yourself in this situation, it’s best to get hold of an experienced mortgage broker who can advise you on the best course of action based on your personal circumstances.
Using an investment fund
If your income structure is complex or difficult to prove, there are lending options available to you. We’ve been giving our clients access to a property investment fund that lends up to 50% LTV. The great thing about this is that an investment fund is not a traditional bank, so their underwriting is less stringent on income.
This type of investment fund is also more focused on the property itself and will therefore mainly focus on the rental income while making sure that you have some income coming in. Although an investment fund is not a traditional bank, the mortgage offered works in a similar way. The fund will take a first charge on the property and once any introductory deals have ended you are free to move away at any time, just like you would if you secured a loan through a regular bank.
Another benefit of going this route is that the property itself is ring fenced from the investment fund’s operational costs so there is no risk of losing your house if the fund was to go under. This gives you peace of mind when going this route.
The value of advice
Mortgage lenders attach a higher risk factor to non-resident mortgages by virtue of the borrower living outside of the UK. This is just one of the reasons it is important to work with an international mortgage broking firm who have ongoing relationships with these lenders and understand their criteria.
An experienced mortgage broker will make sure that your application has the greatest chance of success, as they are able to run your case past the banks to ensure it fits their affordability and lending criteria before submission. This will save you time and hassle, as the process of applying for a mortgage is very admin intensive, with lots of supporting documentation required. Any error along the way can seriously prejudice your application and you may be refused and have to start the entire process from scratch.
Over the years our team has built relationships with many offshore banks, a range of private banks and the above-mentioned investment fund. This means that no matter your personal circumstances, if a mortgage is possible for you, we are well placed to secure one.
- Ian Henning runs the mortgage division at Sable International. If you’d like to get in touch with him or a member of his team you can email [email protected]