Are you looking to invest some money in a buy-to-let property? Then, you will need to consider the mortgage payments.
On that note, if you have been living abroad as an expatriate, you might wonder if getting a BTL mortgage is possible. The simple answer is – you can get it, but there is a catch.
Buy-to-let mortgage rules for expats are slightly different than those for UK citizens. Thus, you must know these aspects before investing or considering an application.
So, what should you consider before applying for an expat BTL mortgage? Let’s find out!
Table of Contents
What are Expat Buy-To-Let Mortgages?
Expat buy-to-let mortgages are loans designed for UK expatriates wishing to purchase property in the UK to rent out. These mortgages cater specifically to the needs of expatriates, allowing them to invest in the UK property market even while they reside in another country.
First, let’s address the basics of buy-to-let mortgages for expats. As you already know, buy-to-let properties are primarily meant to be rented out to non-related tenants. Therefore, the mortgage for such a property differs from the one used for a residential property.
Put simply, BTL mortgages are relatively stricter than normal residential mortgages. That’s because the risks involved with such a property are fairly high. And when it comes to expats, the risks become even more considerable, meaning that the strictness increases simultaneously.
If you wish to get such mortgages as an expatriate, you will notice that the regulations are pretty stringent. In other words, your credit history, deposits, income type and other financial factors will be checked more thoroughly than usual.
On that note, finding a suitable lender will also be a challenge since there are a limited number of mortgage providers that can meet your specific needs.
However, it doesn’t mean there is no hope of getting a mortgage. It’s just that you will need to be very careful and put a lot more effort into the process.
How To Get A Buy-To-Let Mortgage If You Are An Expat?
The process for getting a BTL mortgage as an expat consists of three steps. In essence, it is the same process used by regular citizens. But as we mentioned, the regulations and checks are much more stringent.
In any case, the process has been described below.
1. Gather Documents
The first step of the process requires you to gather all the required documents. Many essential documents may vary between lenders, but some basic documents will be requested everywhere.
These are photo identification (usually passports for expats), visas, address proof, tax documents, and bank statements, among other things.
You may need to provide specific property details and estimated rental projections. If you are self-employed, you will need to get your proof of accounts ready, along with other necessary documents.
2. Speak To A Broker
If you are an expat seeking a BTL mortgage, it is always a good idea to seek help from a professional broker. These individuals are highly qualified in these matters, which means they will be able to guide you better in your quest to get BTL mortgages.
After you provide them with the necessary details, an expat broker will be able to assess your finances and evaluate any property investment plans you have.
Using this information, they can develop a suitable purchasing strategy for your buy-to-let property. Sometimes, they might suggest suitable lenders to help you get a BTL mortgage easily.
3. Apply For The Mortgage
Once the formalities are taken care of, it is time for you to apply for the buy-to-let mortgage. You might have a considerable advantage here if you talked to a good expat broker in the previous step.
Most specialist expat mortgage brokers have direct connections with reputed lenders who specialise in mortgage cases of this nature. As such, they can help you secure a mortgage with relatively manageable interest rates.
Eligibility Criteria For Expat Buy-To-Let Mortgages
Now, let’s look at some of the most crucial financial requirements and eligibility criteria for securing an expat BTL mortgage.
1. Deposits
As is the norm for most Buy to let mortgages, you must provide a minimum deposit amount at the beginning to the lender. In the case of BTL mortgages, this deposit amount is around 25% of the property’s total value.
But this is just the base deposit amount required for normal BTL mortgages. For expats, the amount of deposit demanded by the lender may be higher (or lower, in very few rare cases).
You may also need to provide details about your deposit sources. That’s because some expat mortgage lenders do not accept deposits originating from sources in the UK.
2. Loan-To-Value Ratio
The loan-to-value (LTV) ratio represents a comparison of the loan or mortgage amount with the property’s value. In most cases, the LTV ratio is closely associated with the deposit amount which we have outlined above.
Typically, the LTV ratio for normal buy-to-let mortgages is capped at 75%. But in the case of expats, the required LTV ratio cap will usually be lower, thus requiring a higher deposit, as discussed above.
The flexibility varies between different lenders, so you should consider this aspect carefully before applying for a BTL mortgage or paying the deposit.
3. Income
Income is another crucial aspect that is checked during the mortgage approval process. To get a BTL mortgage, an individual typically needs an annual income of at least £25,000. You must also provide valid proof of income to back up your claims.
With many lenders, the above aspects apply to both regular citizens and expats. However, the latter may require you to meet some additional criteria in some cases.
For instance, some lenders may require you to be employed with a large multinational corporation with a notable presence in the UK.
4. Country And Home Ties
If you are an expat seeking a BTL mortgage, you will naturally need to provide proof of residence in your current country. Some lenders may only provide mortgages to expats living in countries belonging to the European Economic Area (EEA).
Others may prefer countries belonging to the Financial Action Task Force (FATF), and so on.
Apart from that, you must provide information proving you have some ties to the UK. For instance, you may need to provide the details of your UK-based bank account, correspondence address, or UK tax details, among others.
5. Credit History
Your credit history is another key criterion for getting BTL mortgages as an expat. If you have a good credit record, you will have a better chance of securing a mortgage, and vice versa.
Relating to point 4, a good credit report presence in the UK although living abroad, is a really positive factor as this allows lenders to identify you.
Final Words
That brings us to the end of this guide about expat buy-to-let mortgages. So, the key takeaway from the above discussion is that the process for getting an expat BTL mortgage is slightly stricter than a conventional BTL mortgage.
If you follow the procedure mentioned here, you should be fine, and all be well. Also, you should consider the eligibility criteria before applying for such a mortgage.
Of course, there are some other criteria that you might need to meet, such as employment details or previous experience. But the ones we have discussed are the most important.
**A buy to let mortgage will be secured against your property.
Some types of buy to let mortgages are not regulated by the Financial Conduct Authority.
All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.
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