buy-to-let mortgage

Expat mortgage market growing as lenders expand offerings

Buyers from overseas continue to seek UK property investments, and obtaining an expat mortgage is no longer the barrier it once was. 

British citizens who do not reside in the UK have been increasingly seeking loans to purchase property here, according to Dudley Building Society. As a result, the lender has enhanced its expat mortgage availability to cater for its growing client base in this field.

The firm has increased its maximum loan size for expats from £1 million to £1.5 million, which will make a significant difference to the types of properties that can be purchased by those living abroad. It is also offering a two-year fixed rate expat mortgage with an LTV of up to 80% at 3.89%.

While borrowing can sometimes be more of a challenge in the “underserved” and “niche” area of expat mortgages, Dudley Building Society’s new offering aims to open up the market for more buyers. The lender has also enhanced its holiday let loan offering at the same time.

New expat mortgage opportunities for 2022

Commercial director, Kieron Blackburn, said: “We see continuing demand from expat and holiday let customers and it seemed appropriate that we look to enhance our offering in line with our recent increase in maximum loan sizes for our standard large loan product. There are now only two other lenders who can currently match our new loan sizes for expats, and two other lenders that can match our loan sizes for holiday let mortgages.

“Dudley can be very pleased with the progress it has made this year. Thanks go particularly to our introducers for their continuing support. It is satisfying to know that as we approach 2022, the Society is in great shape to go on providing a robust proposition based on strong products, innovative solutions in underserved niche areas like the expat market and underwriting that always seeks to understand the human story behind each application. We are looking forward to being on the road next year and taking our proposition to more brokers.”

Many of the country’s mainstream banks now offer mortgages specifically for expats, alongside a number of specialist lenders. Expat buy-to-let mortgages can also be obtained for property investors living abroad.

Buy-to-let from abroad

If you want to buy a property to generate rental income while you live abroad, you’ll need a “buy-to-let expat” mortgage. But property you purchase to be your primary residence will require a “residential expat” mortgage.

To apply for either, you’ll need a substantial deposit (ideally held in a UK bank account) and evidence of the deposit’s source. You’ll also need proof of residency (for the past three years) and proof of income for a residential mortgage. For a buy-to-let mortgage, borrowers will be assessed on their expected rental income.

You should also take the repayment currency into account. The Mortgage Credit Directive (MCD) means that lenders must monitor exchange rates to ensure foreign currency loans remain affordable for the borrower. Some specialist lenders also have an “approved currency” list.

Where are overseas investors buying?

According to the Centre For Public Data (CFPData), who compiled the research from HM Land Registry, more investors than ever are branching out from the traditional London market. While a decade or more ago, London was the go-to spot for a lot of foreign investment, many are seeing the value of backing new areas elsewhere.

The data shows that, in particular, Liverpool, Manchester, Salford and Leeds are attracting bigger numbers of overseas investors now. All of these areas are notable for their regeneration, redevelopment and investment overhauls in recent years, making them a genuinely attractive alternative to pricier London. The CFPData believes most of the foreign investment in these cities is in flats, supporting the thriving rental demand in these areas.

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