Buy to let mortgages for non UK residents

In a post-Brexit world, it’s now becoming clear that the UK property market is one of the most desirable investment destinations in Europe, if not the world.

Whilst many other countries were struggling with the economic fallout from the Coronavirus pandemic, the UK property market was having something of a resurgence as prices and demand rose quickly throughout 2020, with some areas in England registering price rises of over 8% year-on-year.

Due to the stability of the UK economy and the fact that the UK has its own central bank that can set monetary policy and interest rates, it’s meant that not only UK residents, but also foreign nationals and overseas residents have expressed huge interested in investing in the market.

With government bonds returning some of the lowest yields in decades, many are now flocking to UK property for good returns in a safe and reliable market, which the UK has demonstrated it represents with gusto.

This, in turn, has driven a huge surge in demand for residential property mortgages, mortgages for non-UK residents, and buy-to-let mortgages more generally. It’s not hugely difficult for a British resident to get this type of mortgage, or a buy to let mortgage, but for foreign nationals it can prove difficult for a number of reasons, which is why we’ve put together a brief guide for these types of buy-to-let mortgages.

What is development finance?

Looking for development finance? This type of short-term finance is used by property developers, builders, landlords, companies or individuals that need to fund 100% of the refurbishment or in the case of a ground up development the entire development costs. These loans are typically for experienced borrowers, however at Hank Zarihs Associates we have a wide panel of lenders that can offer development finance for first time developers. For example, development loans can be used:

• When developers, landlords, builders or individuals want to refurbish, develop or convert a residential or commercial building to sell within a 12 -24 month term
• When a borrower wants funds to buy a property at auction
• When the borrower needs to secure finance against a property that is uninhabitable, and unsuitable for a standard mortgage lending purposes, a development loan could be obtained that would give you up to 65-75% of the value and 100% of the build and associates cost (pending refurbishment.)

You would not usually apply for a development finance loan on the high street with your usual bank, as this is a specialist product that tends to be offered by specific development finance lenders or intermediaries.

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How much can a non UK resident borrow with a buy to let mortgage?

Well with this type of non-UK mortgage, or for a buy to let, it will broadly depend on your circumstances, your deposit and your income and where that income comes from, and will also depend on the lender you approach.

With British lenders, you’ll need to meet their criteria first, which we can help you with, but broadly speaking you’ll be able to borrow anywhere between £3000 and £1 million depending on your circumstances.

For a non-UK resident, it will generally tend to be the case that banks are little more risk averse in these circumstances, but it’s worth speaking to an expert on this.

What is the difference between a buy-to-let mortgage and a residential mortgage?

A residential mortgage is for a property that you or your immediate family intend to live in at least some of the time, whereas a buy to let mortgage is designed for investors who want to buy a property and then rent it out to somebody else and become a landlord.

For property investors, they tend to take out this type of landlord mortgage and they can either choose to repay only the interest, making the repayments cheaper, or they can pay the interest and the cost of the property too with their loan repayments.

There are a few different BTL mortgages that you can choose from, depending on your circumstances, and we’d recommend speaking to one of our brokers about your options with this, regardless of which country you’re resident in.

For landlords looking to gain a rental income, a BTL mortgage is often your best choice as these are specifically designed for this type of mortgage, and if you take out a property on a residential mortgage and later on decide to rent it out for rental income then you’ll often need to seek the permission of your mortgage lender anyway.

For an outside national, the process is only slightly different in that your income has to be declared if you’re looking to invest in a property, and the application process may be slightly longer in those circumstances.

Guernsey resident looking for buy to let mortgages

If you’re resident in Guernsey then you’ll be making an application under the same process as a foreign applicant, however, it tends to be easier to get approval from British territories, and this is something you can discuss with a property advisor as they can explain that process to you.

Due to tax divergences with the mainland UK and Guernsey, it would also be advisable to discuss this with an accounting, and if you’re looking to buy a BTL property, then it may even make sense to set up a specialist company in the UK known as a special purpose vehicle, which are used for tax efficiency and can help you to manage a property portfolio more efficiently in the long run.

It’s a similar situation if you’re looking to buy a property or get mortgages as a British citizen in Guernsey, and so this again would probably be best discussed with an expert.

Buy to let mortgages for Jersey residents

This is a similar situation to if you’re a Guernsey resident, and most banks and traditional lenders will expect a little more detail with your application, but Jersey residents shouldn’t expect the same criteria to buy a property as, say, a Brazilian resident, for example.

Most UK banks and finance companies have offices based in the Channel Islands and, as such, it’s fairly easy in most cases to get the paperwork required to get approval for a mortgage application for your property.

Again, as with other Channel Islands, it’s worth talking this through with your accountant before you seek to earn rental income from properties or flats or a house.

There is also the prospect, for Jersey residents, when looking for a loan for properties or flats, that they could also set up an ‘SPV’ special purpose vehicle to make their purchase more tax efficient, and this is something worth discussing with an accountant or tax advisor, as well as one of our brokers.

Speak to one of our Buy to let mortgage advisors

We’ve got a team of specialist and dedicated advisors who can talk you through all the requirements for this type of application and walk you through all the paperwork that might be required.

Purchasing properties in the UK can be one of the most lucrative investments in the world if done in the right way, but things can often be confusing, especially when you’re looking for finance or loans and you’re not a British national or living in the country.

It needn’t be complicated, however, and that’s why we’ve got a team of highly knowledgeable and friendly experts who can help you out from start to finish and give you the confidence and reassurance that you’re looking for.

We’ve spent years in the industry and so that’s allowed us to build up a huge knowledge base and a panel of lenders that stretch right across the mortgage market, so you can be confident that we’ll be able to offer you a range of quotes from right across the spectrum, rather than having to approach these lenders and banks individually where they may ask for different details and delay the process of getting the right funding.

Because we’ve spent so much time cultivating these relationships it means that we’re able to offer some of the best rates around and in many cases we can offer exclusive deals and rates for our clients, with our panel knowing that we only put forward quality applications that have a good chance of acceptance.

Our panel have the confident in us because they know that we take the time with our clients, offering market leading advice and guidance throughout the process helping you to put together your application as quickly as possible.

We also appreciate that our clients need funds and finance arranging in the quickest possible time, which is why in many cases we can get you an agreement in principle in a matter of days.

To ensure you’re getting the best possible deal with the least amount of fuss make sure you speak to one of our specialist advisors today so that they can talk you through things and understand your situation.