Expat Buy-to-Let Mortgages

Getting any type of UK mortgage as an expat is tricky and buy to lets (BTL) are considered higher risk by lenders than a standard residential mortgage. So, if you live overseas and want to invest in the UK housing market, you may be wondering how to get a BTL mortgage – but the good news is that help is available, and we can show you exactly where to find it.

This article will explain the complexities involved, what you can do to maximise your chances of being approved and how the right mortgage broker can help you out.

Can you get a buy-to-let mortgage if you’re an expat?

Absolutely! Just don’t expect to be approved by a high street lender. In fact, unless you have taken out a similar product previously, you may well end up using a provider you haven’t yet even heard of.

That’s because traditional mortgage providers’ eligibility criteria don’t lend themselves to the flexibility of evidence required to assess expat finances. But there are a handful of specialist lenders who are happy to offer finance to expats looking for a buy-to-let mortgage and the right mortgage broker can tell you exactly who they are and help you get the best deal available with one of them.

Mortgages are available to expats looking to:

• Turn an existing property into BTL
• Buy a new BTL property
• Expand a BTL portfolio

Problems you will face and how to overcome them

Essentially, the problem for expats looking for a UK investment mortgage is that it is difficult for lenders to assess your income, affordability and credit history. This means assessing your application requires enhanced due diligence, but there are ways that you can overcome these issues.

Proving income and affordability

Regulated buy-to-let mortgages can only take into account income from sterling so a vast chunk of the lending market is not accessible for expats.

However, provided the loan is affordable, with an expat BTL mortgage advisor on your side there is no reason why you shouldn’t be able to find a lender.

You will need to provide proof of all income streams to ensure you get the best deal possible. This might include:

• Your overseas salary
• Income from stocks and shares
• Any rental income
• Pensions
• Any other investment income

Providers are wary of all these income types which is why you need to approach a specialist lender who operates a risk model that suits complex income streams.

Some lenders will disregard your anticipated rental income from the property you are looking to buy. If you are remortgaging an investment property as an expat, providers may look more favourably on the rental income it generates.

Proving your credit history

Many lenders will insist you have a credit footprint in the UK.

If you still have a well-managed mortgage or any other credit that is still ‘live’ in the UK, you may be able to demonstrate some level of positive credit record.

An existing buy-to-let mortgage will also serve as evidence of a positive credit rating.

Without these, lenders are restricted to making their own judgement on your creditworthiness based on the documents you supply and your ability to negotiate.

Restricted countries

Even most specialist lenders have a list of restricted countries.

These include nations that are considered high risk or don’t comply with the international money laundering task force such as:

• Kenya
• Rwanda
• South Africa
• Bahrain
• Bulgaria
• Hungary

Technically, there is an agreement in place between the UK and Australian governments which prohibits providing loans to each other’s residents.

In reality, UK property finance is accessible pretty much anywhere in the world although some areas have a very small pool of potential lenders.

How to get an expat buy to let mortgage

To give your application the best chance of success, follow these steps:

Step 1: Get together all the necessary documents

Your lender will need to conduct the same checks that any residential mortgage provider would but with the added complications of international communication. For this reason, the application will most likely seem bureaucracy heavy and generally take a minimum of six weeks to be assessed. Any missing information will delay the process further.

You will need to provide:

• • Evidence of the currency in which you are paid

• Employer details (often accompanied by a letter from your employer to confirm your position)

• Last 3-6 months payslips if you are employed

• For self-employed, 3 years of accounts and tax returns certified by an internationally recognised accounting firm

• Proof of ID and address

• Your UK passport

• Details of the property you want to buy

• Estimated rental income (in most cases it will need to cover 145% of your monthly mortgage payments)

• Your exit strategy (your long-term plan for the property – live in it or sell?)

• As much detail as possible on your UK credit history

• Details of whether you pay UK taxes

Some lenders will require mortgage payments to be made from a UK bank account in your name and a UK correspondence address, so if you don’t have these, it is worth arranging them before beginning the application process so you can present the relevant information to potential lenders.

You may also be required to provide details of a letting agent in the UK who will manage the property.

If you have more than four buy-to-let properties, you are considered a portfolio investor and may need to provide details of all your properties.

Step 2: Get proof of where your deposit is coming from

The larger your deposit, the less risky you are viewed by lenders and the better rates you will be offered. At this stage you shouldn’t rule out any income streams. Get together a full inventory of all your assets and sources of income to give you access to the widest possible selection of providers.

Step 3: Speak to a broker

A loan of this type will almost certainly be out of your reach without a broker. As an unregulated product, a buy-to-let loan for an expat relies heavily on having an advocate who knows the right lenders to approach based on your circumstances and has existing working relationships in this sector.

If you choose to go it alone and your application is rejected, your chances of later approval become even smaller.

It’s worth noting that even some specialist providers will not accept applications from expats looking to purchase their first BTL property so in this circumstance it’s even more important that you speak to a broker with expert knowledge.

Which lenders can help and what rates will they offer?

Most lenders don’t offer finance to expats, but it is possible to get approved with the right advice. Those who do are flexible in their approach to eligibility criteria and affordability checks.

Since the number of mortgage providers who will even consider your application is small, identifying which lender you should approach requires inside knowledge of the industry and each lender’s appetite for lending to people in your circumstances.

This inevitably means rates are higher than those offered for standard residential mortgages. However, the rate you are offered is largely dependent on the strength of your application and is set according to the lenders’ perception of the risk attached to the loan.

With a 40% deposit, a secure salary and a strong application, you can expect to be offered a rate of around 5% to 6% at the time of writing (May 2023), but it may be possible to secure a favourable deal outside of these circumstances.

Get matched with a broker who specialises in expat buy-to-let mortgages

Maximising your buy-to-let investment requires getting the best mortgage possible. Our broker-matching service will put you in touch with a specialist mortgage broker with detailed knowledge of the industry and a portfolio of success in securing the best deals for expat borrowers.

They will guide you through the process and negotiate with lenders on your behalf to ensure the application is hassle-free and completes as swiftly as possible

Call today on 0808 189 0463 or enquire online to arrange a no-obligation chat.