For expats in Australia, taking out a UK mortgage as an investment tool is one of the best things they can do with their money. But, securing a mortgage on a UK Property can be difficult if you’re an expat living in Australia. The following guide is intended to help expats living in Australia to navigate some of the difficulties involved in taking out a UK Mortgage and maximise the chances of having their application accepted.
Traditional Lenders Vs. Specific Lenders.
Traditional lenders are not equipped to deal with the difficulties involved for Australian expats looking to secure a UK mortgage. Even relatively simple things, such as foreign currency requirements, can prove difficult for traditional lenders. What this means for the borrower is that they could be wasting unnecessary money and time for something that might ultimately fall through. After all, most transactions are time sensitive where property is concerned. Other problems, such as an unclear credit history, can also cause problems and delays since expats’ time living outside of the UK can make things like credit history harder to trace.
Better suited to offering deals to UK expats working in the UK are specialist lenders. Such lenders are much better suited to a holistic analysis of their client’s situation and are experienced in dealing with complexities of expat mortgage applications. They have access to a wide range of products that can be tailored towards their client’s specific needs. As well as this, borrowers with attractive financial profiles may have access to mortgages requiring smaller deposits and favourable rates. And, this can save an expat looking to obtain a UK mortgage a lot of time, stress and money.
For expats working in Australia, purchasing a property to let in the UK is an attractive prospect. Both the minimum and average earnings of someone living in Australia is higher than their UK counterpart. This puts expats living in Australia in a favourable position to capitalise on great investment opportunities in the UK. For Australian expats considering taking out a UK mortgage, it’s important to be aware of some of the roadblocks that may exist for them. One thing to be aware of is the Prudential Regulatory Authority, or PRA, operated by the Bank of England. The PRA aim to stop irresponsible lending which has led to a number of extra checks on mortgage applications. These exist in the form of the following:
– Income Stress Test.
– Rental Coverage Ratio.
– Portfolio Reviews.
In the following section, we will explain why these extra checks give expats further reasons to prefer a specialist lender over traditional lenders.
Checks on Buy-To-Let Mortgages.
The Income Stress Test reviews an applicant’s income and assesses whether you are able to make mortgage repayments. To pass this test, an applicant has to show that they can afford mortgage repayments in the event that the interest rate hits 5.5%. But many expats will struggle to pass this test when dealing with traditional lenders because they do not take into account the full income of an applicant. This is due to a lack of experience in dealing with foreign currency and complex incomes.
The rental coverage ratio requires rental coverage of 145% on standard buy-to-lets and 170% on houses in multiple occupation.
Finally, traditional Lenders will conduct reviews of an applicant’s property portfolio. If any properties in this portfolio fail to be profitable then this will result in the failure of the application. The bigger a client’s portfolio, the bigger the problem this will cause for the potential borrower.
As noted above, using a traditional lender is not the best route for an expat looking to secure a UK mortgage. Using a specialist lender is a much better route for expats looking to purchase property in the UK since every application is assessed on its own basis, meaning the application process is much more flexible. For example, whilst most lenders will require a 25% deposit, with specialist lenders, they may be willing to accept far less than this, depending on how favourable the rest of the application looks. They are well versed in dealing with UK nationals and will often offer better mortgage deals as they have a better understanding of their client’s finances than a traditional lender.
In order to get access to the best deals, smooth the application process and reduce the associated stress, it’s clear that the best route is to use a specialist lender. But, finding the right lender can still be a time-consuming process. Using an expert mortgage broker, like Liquid Expat Mortgages, can set up applicants with specialist lenders, giving access to the best rates and unique offers.
CEO, Stuart Marshall, knows the value of having the best advice when navigating the confusing world of expat mortgages. ‘We’re seeing a lot of investment come from expats in Australia’, says Stuart Marshall. ‘It’s no surprise given the number of Britons living in Australia. They’re realising the financial benefits that can come from investing in a fertile property market in the UK. With their wages outstripping their UK counterparts and the recent turbulence in the UK, there’s never been a better time to invest’.
Liquid Expat Mortgages is the No.1 Expat Mortgage broker. We have a team of experienced and regulated mortgage consultants, dedicated to helping expats find the very best mortgage deal. We work with over 50 lenders to deliver the best product for your needs. For complete Expat Mortgage Support, contact Liquid Expat Mortgages and see how Liquid Expat Mortgages can help you. Just call us 24/7 on +44 (0)161 871 1216 or visit www.liquidexpatmortgages.com.