From high street banks to specialist lenders, those looking to obtain a foreign national mortgage or expat borrowing are seeing a greater number of options available.
The UK mortgage market has remained remarkably competitive in light of recent Bank of England base rate hikes, with average interest rates actually falling over the past two to three months despite the bank rate creeping upwards to combat inflation.
In the foreign national mortgage and expat mortgage space, particularly in regards to investors seeking buy-to-let mortgages, similar patterns have also emerged, meaning investors from overseas are able to obtain better rates and choose from a wider range of products right now.
The likes of Barclays, Natwest and HSBC, all mainstream lenders in the UK, offer a range of options for overseas buyers to purchase UK property. Buyers do not need a British passport to buy UK property, although lenders will have various stipulations based on your individual circumstances and residency status.
British expats living abroad, whether that be Hong Kong, the US or in Europe, will also require a specialist expat mortgage in order to buy property in the UK, but, again, the mortgage options in this space have been opening up off the back of a recent increase in demand.
UK housing market attracting overseas investors
The UK housing market remains steadfast in its position as one of the most stable investment spaces. Even in light of Brexit, the Covid pandemic and turbulence within government, the sector has continued to prove its resilience and its huge appeal among buyers.
What’s more, the weakening of the pound in recent times has led to a favourable exchange rate with the US dollar and other currencies, meaning that buyers from abroad essentially get a discount on purchase at the moment compared with when the pound was performing more strongly.
As such, a number of lenders have noted an increase in demand for foreign national mortgage products and expat lending, which is why many have reacted by adding more products and more competitive rates to their shelves.
Dudley Building Society, for example, has just launched a new expat buy-to-let mortgage range for those wanting to invest and rent out property in the UK. It currently offers a discounted interest rate of 5.89% with 80% loan to value (LTV).
Dudley Building Society distribution director Robert Oliver says: “We have seen a sharp increase in enquires for expat BTL mortgages over recent weeks, which prompted us to introduce these new products to enhance our expat offering.”
While the lender does not currently offer a foreign national mortgage product, the market has seen a similar surge in interest.
Offshoreonline also points out that some major lenders are now offering lower rates for expat borrowers at less than 1% above the BofE rate, as competition returns to the market, including for buy-to-let products for investors who will rent their properties out.
Guy Stephenson, Offshoreonline directors, adds: “With more lenders returning to the expat mortgage market and those lenders now clearly seeking to price expat BTL mortgages competitively, we are optimistic and feel that 2023 will be a year when expat buyers return to the market.”
How to obtain a foreign national mortgage
For those who do not have permanent residency in the UK, obtaining a foreign national mortgage can be relatively straightforward, although it is advised that buyers use a reputable broker to ensure the process goes smoothly.
Buyers will need to open up a UK bank account, and will need to go through similar credit score checks as British nationals would to prove their status. Normally, a higher deposit is also required.
There are a number of criteria you may have to meet in order to qualify for a foreign national mortgage, specific to those who are non-EU nationals, such as having a Tier 2 work visa, a family visa, a UK ancestry visa or a residence card.
Information about visas can be found on the UK government’s website, or speak to a broker or a specialist lender about your borrowing needs and how to apply for a foreign national mortgage.
At BuyAssociation, we have been helping international buyers access the UK property market since 2005, so get in touch for details of our current investment opportunities or for more information about how to invest.