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Expat mortgage approvals rising steadily

Approvals for house purchases in the UK by expats increased towards the end of 2020 and 2021 has followed the same pattern according to the latest figures from the Bank of England.

The number of expat loan approvals for purchasing in the last 3 months is up a massive 21% on the same period last year. Re-mortgaging saw an astonishing increase of 41% over the same period. These high figures are most likely are due to the Brexit conclusion.

The next few months are likely to be less active, but at present we can confirm business is highly active with the buy-to-let market surprisingly leading the way.

Re-mortgaging in the expat market continues to be very buoyant as homeowners look to lock in advantageous interest rates which are still currently on offer. These rates are likely to disappear as the year progresses if the experts are correct as a rate rise is expected.

Why re-mortgage?

There are many reasons you may wish to consider a re-mortgage and it is without any doubt something every expat homeowner should consider, especially if you are stuck on your current lenders standard variable rate. It is not always best advice as your current deal may have conditions that are not beneficial to re-mortgaging, but you should take time to review on a regular basis. So why re-mortgage?

1) Secure a better rate of interest than you are currently paying.
2) Change current deal to a fixed rate for long term security.
3) Raising capital from equity within your property.

Need assistance?

Our professional team of fully qualified independent advisers are used to dealing with all types of expat re-mortgage/mortgage business. Please do call to discuss your requirements and we will be happy to help.

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Expats are choosing independent broker assistance for mortgages

The number of expat mortgages coming through brokers has risen steeply over the last 2 years, this figure now stands at 74.3% from 64% in the last 12 months

Need for help

Brokers believe the increase in regulation and complexities of the market are the driving factors. Affordability calculations and lender criteria have become harder for consumers to understand.

It is not surprising that more and more clients are choosing to obtain their mortgage via an independent broker as lenders require more detail than ever before.

This is not to say it is more difficult to obtain an expat mortgage just far more complex. For the majority of expat clients who reside abroad communicating with a lender in the UK can be very time consuming and confusing.

Expats seem to value a personal service which is often missing from the high street banks email service, this is particularly the case with expats re-mortgaging.

Buying a home in the UK is a challenging task if done from afar so making the mortgage application as pain free as possible is obviously a huge advantage for the expat.

It is very clear that expats appreciate the value of a broker who can guide them through the process and provide quality advice on the best options available to them.

Independent broker benefits

  • Full range of mortgage choices
  • Industry qualified advisers
  • UK based for easy communication
  • Fully automated service
  • Faster completion

Assistance required

If you would like help with your new or re-mortgage, please make contact and one of our advisers will be happy to help.

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What mortgage type do you need as an Expat?

If you are looking to buy a property with an expat residential mortgage, you or a member of your family must live in it – either now or in the near future. Essentially, it’s a home.

However, as a foreign national, a UK residential mortgage isn’t straightforward. Residential mortgages are regulated by the Financial Conduct Authority (FCA) so lenders who want to provide mortgages to overseas customers have stricter criteria. And what this translates to is fewer options. As a result, many non-UK buyers tend to use buy-to-let mortgages to buy their property.

The buy-to-let product offers buyers greater flexibility as the property owner can rent the property to a tenant or a family member as well as live in it themselves. Overseas buyers in territories such as Hong Kong, Singapore, and the USA have continued to make buy-to-let mortgages the preferred product choice.

Buying a UK property with a buy-to-let mortgage is a great option for non-UK expats. While you live and work elsewhere, you can get another stream of revenue from renting your property to a tenant in the UK. In the future, you can sell this property as part of a retirement fund or you could even move into it.

If your child wants to study in the UK, owning a property is a great opportunity for them to have a UK base. A UK property can also serve as a great starting point for a larger investment portfolio. In short, a buy-to-let mortgage offers breadth of choice and it facilitates adaptation to changing circumstances.

Buy-to-let mortgages are also more flexible than residential mortgages. For example, you can move into a home bought on a buy-to-let mortgage. However, you cannot rent out a home bought on a residential mortgage without getting permission from your mortgage provider and switching your mortgage to a buy-to-let which, in some cases, can be expensive and not always guaranteed by your current lender.

Help required?

If you would like to review your current mortgage deal please do make contact and one of our advisers will be happy to assist.

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Outlook steady despite all the uncertainty – Expats take comfort

The Bank of England has held interest rates at the historic low of 0.1% in its latest base rate decision, saying the UK’s economic outlook is ‘unusually uncertain’.

The Monetary Policy Committee (MPC) voted unanimously to keep the base rate, which acts as a guideline for banks and lenders when they set their interest rates, at the level it’s been since March.

Normally the Bank holding rates isn’t surprising, but this comes after speculation that the interest rate would fall to 0% or even into negative figures.

Reports emerged in October that the Bank had written to the chief executives of several firms to ask whether their companies would be ready for a negative base rate, and it’s known that the Bank is actively exploring the option of setting a negative rate.

Why the base rate matters?

The Bank of England base rate influences how much banks and other lenders charge customers to borrow money, and the amount of interest they pay on savings.

A lower base rate generally means lower interest on savings, so your pot will grow a little more slowly. But mortgage and loan interest rates are likely to drop, too, making it cheaper to borrow.

Higher base rates usually mean that savings interest grows faster, but mortgages and loans become more expensive.

The Bank of England changes the rate to help keep inflation at around 2%, which is considered a sustainable level, raising and lowering it in line with current events. It kept the rate the same for years after the 2008 crash, but Brexit – and now coronavirus – have forced the Bank to make quick and dramatic changes.

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Expats need to get moving

Brokers with expat and foreign investor customers buying property in the UK, need to secure completion before 31 March next year or face the risk of customers paying a large surcharge.

That is the warning from the expat mortgage markets, which explains that expats who miss the deadline will face higher stamp duty levies than residents.

Lenders, who are involved in the expat sector, are concerned that the current focus is on domestic borrowers beating the re-establishment of stamp duty on 1 April, but the 2020 budget announcement also included an extra 2% levy on property bought and completed by expats after 31 March.

With all the other news surrounding Covid-19, it would be easy to forget that the 2020 Budget also stated that the 3% levy on second homes will also apply to expat purchases after the 31st March, so that overall, completing from April 1st, expats will be paying 5% more than the standard rates. A double blow.

The property market is booming at present and expats are keen to maintain and establish a property foothold, even if they do not intend to live in the UK at present.

Advisers whose expat customers complete before the 31st March benefit from the postponement of the standard rate of stamp duty in the same way as everyone else, but now is the time to act before what could be up to an extra 5% levy is introduced in April.