Expat repatriated to the UK looking at buy to let mortgage

THE SCENARIO

While there are many UK expats spread around the world we are often approached by expats looking to return to the UK and invest in the UK property market. The fact that many have been away for a number of years can lead to problems with regards to their financial footprint and their address history in the UK. On the surface what may look like relatively straightforward mortgage applications can quite quickly turn into more complicated, multi-layered and challenging situations.

This next case study involves an expat returning to the UK and looking to acquire a new build property with a buy to let mortgage.

Client scenario

The client was looking to acquire a property on a new development using a buy to let mortgage with a target LTV ratio of 80%. At the point of applying for the buy to let mortgage they were first-time buyers and first-time landlords, not yet having a residential property of their own. The fact that the property was a new build on a brand new development would also impact our ability to raise the level of finance at the indicative LTV ratio.

So, the scenario for this case study was as follows:-

Property value: £205,645
Nature of investment: Buy to let property
Target LTV ratio: 80%
Mortgage value: £164,516
Deposit required: £41,129

Even in the most accommodating of circumstances an 80% LTV ratio for a new build property was ambitious. There were also additional issues to take into consideration as the client had not long moved back to the UK and did not as yet have their own residential property.

Issues to address

We have touched on the majority of issues to address with this particular case study but when you dig a little deeper, the situation becomes even more complex. So, a summary of the issues to consider is as follows:-

First-time buyer: No experience in the UK property market
First-time landlord: No experience managing private rental properties
Client category: Still considered an expat by many banks (reduced access to finance)
Lack of financial footprint: After only three months back in the UK this was challenging
Address history: No UK address history
Target LTV ratio: A target of 80% is ambitious in any scenario

While we are often approached by expats returning to the UK, the majority are not first-time buyers or first-time landlords when looking at buy to let mortgages. In this instance there was no talk of asset backing which could be brought in as security. The fact that the client was also looking to acquire a buy to let property so soon after landing back in the UK was challenging to say the least.

The solution

In a classic demonstration of our ability to reach right across the financial markets we found the perfect lender in the shape of Gatehouse Bank. This is one of the new ethical lenders now operating in the UK market with an array of Shariah-compliant financial instruments. While these banks are still run as businesses, they often operate under very different criteria such as in this instance the ability to accommodate an 80% LTV for a first-time buyer/landlord. The fact that they were willing to overlook not only the lack of a UK financial footprint but also a relatively high LTV target – and lack of experience in the UK market – certainly offers a new option going forward.

We managed to secure funding on the following terms:-

Property value: £205,645
Mortgage type: Buy to let
Mortgage value: £164,516
LTV ratio: 80%
Deposit required: £41,129
Payment Terms: Interest only
Interest rate: 3.25% fixed for two years
Mortgage duration: 15 years

The UK property market has changed dramatically over the last 20 or 30 years with an array of new banking options now available. Ethical banks, once seen as something of a gimmick, are now threatening some areas of business previously dominated by traditional banks. Often operating on what can be a very different criteria, in this instance they were more accommodating than traditional UK banks. They were prepared to look above and beyond a lack of experience, lack of a financial footprint and difficulty in forecasting rental income on the new build property.

We were delighted to arrange an 80% LTV when our initial indications suggested that UK banks were not flexible above 70% – with many having predetermined LTV caps on new build properties. It is fair to say that the ethical banking option is one which is here to stay and one which we will no doubt come across numerous times going forward.

What can Enness do for you?

This particular case study had a whole range of different challenges from a lack of landlord experience to no current UK residential property, high LTV target to no UK financial footprint. This would require a bespoke arrangement with an array of traditional banks baulking at not only the high LTV ratio but the general circumstances of the funding application. We are seeing more and more UK expats moving back to the UK but in the majority of cases they tend to already have residential property awaiting them. In this instance the client was looking at a buy to let investment prior to finding their own residential property.

The fact that we are an independent mortgage broker means that we are free to talk to more than 300 different lenders across the market. More and more of our initial investigations bring us into contact with new ethical banks which are now a real option for many clients. They operate on different criteria to traditional UK banks even though they are still run as businesses. So, if you are looking to repatriate back to the UK, and require mortgage finance for a property acquisition or buy to let investment, please feel free to call us.

We have access to real-time market rates and can show you an array of different solutions to your situation. Comparing and contrasting real-time market rates will show the pros, cons and cash flow benefits of individual solutions – allowing you to decide on the best way forward.

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