As the global marketplace has opened up in recent years more people are now looking overseas for their employment prospects. It is not difficult to see where there might be an array of potential difficulties when looking to raise mortgage finance. In recent times we have been approached by many different nationalities with complex working scenarios and investment proposals.
Our next case study involves a Mexican passport holder, self-employed in Dubai who was looking to acquire a UK newbuild. Even before delving deeper into this particular scenario, there are a number of potentially challenging issues to contend with.
We have worked on numerous mortgage funding exercises where relatively simple scenarios have very quickly turned into complex specialist negotiations. To be fair, this particular case study looks exactly how it panned out with a Mexican passport holder, self-employed in Dubai looking to buy UK property. The UK property in question was a new build which again attracts its own complications and issues with regards to LTV’s and mortgage funding.
It can be extremely difficult to clarify overseas earnings when looking towards UK mortgage funding. Indeed we know that many traditional mortgage companies will shy away from overseas earnings and company accounts with relatively little history. So, the scenario in this case study was as follows:-
Client: Mexican passport holder
Employment: Self-employed in Dubai
Property value: £172,000
Property location: UK
Property type: Newbuild
LTV required: 75%
Mortgage type: Interest only preferred
Even if we ignore the nationality and employment issues, a 75% LTV on a newbuild property in the UK is rare. We know that the vast majority of mortgage companies will cap any mortgage funding for new builds at around 65% – this is before we even begin to consider the interest only preference. A growing number of mortgage providers will not even consider someone self-employed in the UK let alone self-employed overseas. So, there were a number of issues we needed to consider.
Issues to address
In summary the issues which we needed to consider with this scenario were as follows:-
Employment: Overseas in Dubai
Nationality: Mexican passport holder
Income: Relatively new company, only one year of accounts
UK footprint: No footprint whatsoever in the UK
Property experience: Client did not own any property assets
Target LTV: 75%
Mortgage type: Interest only preference
In theory, if the client had company accounts going back a few years then we could have used these as a basis for the income multiple. There was also the fact that the client did not have a UK bank account, no existing property assets and there was no UK address/financial footprint from which to carry out credit checks. It may not be such a well-known fact but many UK mortgage companies will offer relatively lower LTV ratios on new build properties. We knew from a relatively early stage that this would be a specialist bespoke arrangement as opposed to a traditional run-of-the-mill mortgage funding exercise.
This is where our strong relationships across the financial markets come into play!
One of the first issues to resolve was that of opening a UK bank account through which mortgage funding and mortgage payments would flow. Using one of our contacts in Dubai, we were able to arrange the opening of a UK bank account for the client with minimal costs. This was the steppingstone towards a solution which thankfully fulfilled all of the client’s requirements
The solution was as following:-
Funding partner: Specialist lender
Property value: £172,000
Mortgage funding: £129,000
Mortgage type: Interest only
Mortgage rate: 4.54% fixed for five years
Duration: 15 years
This is a perfect case study where a client has more than sufficient income to cover normal mortgage requirements but other issues come into play. We are often approached by international clients looking to acquire UK property such as expats living in Dubai. However, a Mexican passport holder, self-employed in Dubai and looking at UK newbuilds, this was different.
An inability to clarify income, high LTV requirement and an interest only mortgage preference are challenging individually but cumulatively they can be very difficult. There was also the issue regarding new build properties which are seen as potentially risky when it comes to short to medium term pricing fluctuations. Thankfully, we were able to arrange a bespoke financial package which worked extremely well for the client.
What can Enness do for you?
Over the last couple of years we have dealt for approaching 100 different nationalities and are regularly contacted by investors from around the world. Common issues include a lack of UK footprint, difficulty in clarifying international income and in this circumstance, a self-employed status. Our independent status allows us to negotiate with in excess of 300 lenders across the international money markets. We are not tied to any one lender or anyone group which gives us the ability to negotiate the most competitive terms. Our experience and contacts can also open doors which may be closed for others, with particular emphasis on overseas income and those without a UK footprint.
If you’re in a similar situation to the above client we would welcome the opportunity to discuss your scenario in more detail. We are confident we can find a traditional or bespoke funding package for any scenario and we often pick up where our competitors have failed. Our ability to match specific funding requirements, and client scenarios, with specific mortgage providers saves time and maximises the chances of success.
We can present you with an array of different solutions to your scenario. Using real-time rates you are able to compare and contrast the impact on your cash flow, finances and assets going forward. We can also offer you our advice on the best solution and talk through any questions you may have.