In recent times we have seen more UK citizens venturing overseas for employment and then returning in their later years. While many have accumulated significant wealth during their overseas ventures, there can still be a number of challenges when it comes to raising funds to finance a home. This case revolves around British nationals returning to the UK full-time, remaining in employment and looking to refinance an existing mortgage on a £1.3 million property. The eldest applicant was 60 and looking to secure as long a mortgage term as possible.
While there is no legal retirement age in the UK, many lenders are still cautious about taking on clients looking to work above and beyond 70 years of age. Thankfully, we work with an array of companies who appreciate the changing shape of the UK employment market and are able to address such concerns. There were a number of issues to take into consideration with regards to this case study but ultimately we were able to address these.
The basic client scenario was as follows:-
Property value: £1.3 million
Property finance: Refinance existing international mortgage
Clients: British nationals returning full-time from overseas
Age: Eldest applicant was 60
Income streams: Overseas and new business contract
Employment situation: Looking to work beyond 70 years of age
There are a number of elements to this case which individually would be fairly easy to resolve but cumulatively led to a quite complex and challenging situation. The main income earner had a fairly complicated situation with a relatively small salary from an overseas source, a wholly owned limited company earning a small profit but the main source of income would come from a new contract. The new contract was pivotal to the client’s long-term finance yet he was only three months into the arrangement.
Issues to address
The overall UK mortgage market is huge, taking in every scenario you could consider, however, many lenders are concerned about taking on new customers borrowing beyond the age of 70. As a consequence, we had to use our contacts in the lending market to create a degree of competition which would ultimately bring about a very competitive resolution. However, the main problem here revolved around the client’s various income streams.
A relatively small salary from an overseas source together with historic profit from the client’s limited company, were nowhere near enough to fund the refinancing. The crux of the application revolved around a contract with a overseas company which was relatively new. Upon further investigation we realise that the client had historically held shares in the overseas company but relinquished these as he took on additional roles in the past. Therefore, he already had a very strong relationship with the company, owners and was well aware of his role going forward.
In summary the issues to address revolved around:-
Source of income: Predominantly revolving around a new work contract
Refinancing: Existing mortgage due for refinancing
Tax situation: Self declaration with limited input from new contract
Mortgage LTV ratio: Circa 50%
Thankfully, the main income earner already had a very strong relationship with the company that had awarded him the long-term contract. Even though the contract had only been in existence for three months it added credibility to long-term income forecasts and offered lenders a degree of security. Working together we were able to demonstrate that the client had historically earned this level of income during previous similar roles when working overseas.
As an independent mortgage broker we have access to more than 300 lenders across the globe. Our experience ensures that we know which lenders to approach to fulfil the requirements of different scenarios and expectations. The subject of working beyond 70 years of age is a hot topic at the moment and a scenario where the number of potential lenders can be significantly reduced. In this case study there was also the issue of limited income in the short term despite the signing of a lucrative new long-term contract.
The challenges were partly offset by the fact that the clients only required an LTV ratio of circa 50%. As a consequence, the historic connection with the new long-term contract together with significant headroom between the property value and mortgage requirements allowed us to inject a greater degree of competition amongst lenders.
Property value: £1.3 million
Mortgage funding: £626,990
LTV ratio: 48.23%
Mortgage duration: 15 years
Mortgage rate: 2.99% on a two-year discounted variable rate
While the situation is changing with regards to mortgages for older parties there is still limited competition amongst lenders in this area. When you also consider the non-traditional income scenario for this case study it was obvious it would require a bespoke approach with a niche lender.
What can Enness do for you?
The repatriation of expats is now more commonplace and as such has created a growing market for refinancing in later years. This is an area which often requires a bespoke arrangement with niche lenders who specialise in specific scenarios. While this was a complex case study on the surface, we were able to utilise our historic relationships with various lenders to create a scenario which would produce a competitive outcome. The refinancing of expat mortgages is an area in which we have great experience and a unique set of skills allowing us to sculpture the right outcome.
We know that some mortgage brokers have refused to take on such scenarios in the past. However, if you find yourself in a similar situation we would welcome the opportunity to chat through your challenges in more detail. As an independent mortgage broker with access to global lenders and huge experience, we can create an array of potential solutions for you to consider. The use of real-time rates allows you to compare and contrast not only short-term cash flow but also short, medium and long-term liabilities. When in receipt of all of the information and potential solutions, it is then a case of executing the one most appropriate for your situation.