Expat
Buy-to-Let Mortgages

An expat BTL mortgage means a buy to let mortgage for expats. They are available to help you invest in the UK property market. There are many options available for obtaining a BTL mortgage. However, there are some extra challenges for expats who wish to acquire a BTL mortgage. 

BTL mortgage

A BTL mortgage is used to purchase and remortgaging residential property within the UK to let it to private tenants. In recent years BTL mortgages have become increasingly popular, due to the rising value of the property, and the rental income that can help finance the purchase.

For expats the UK property market is an excellent investment because many people intend to return home when they have finished working contracts overseas. Many expats who use the BTL mortgage, will move into the property once the current tenant contracts are finished.

However, the BTL market is not entirely risk-free. As well as the average risk of the value of the property falling, there can be exchange rate issues. This will impact you if you are purchasing in another currency. Exchange right movements can go up or down so they can work in your advantage too. However, this is still a risk.

BTL mortgage requirements

In general, you would likely need a minimum of 25% deposit for a buy to let mortgage, and rental income will effectively define how much you can borrow overall. Many lenders would require rental income to exceed the mortgage payments by a ratio of 145% if the mortgage rate was 5.5%.

In general BTL mortgage lending requirements can be pretty tight, for example, landlords with four or more properties are classed as portfolio investors. This means that lenders will want to look at the whole property portfolio when they are considering an application for just a single BTL mortgage. They will also need to know the extent of current borrowing, total rental income, and cost of your existing portfolio. As well as requesting information about your other assets and income.

Can I get a UK BTL mortgage as an expat abroad?

Expats who apply for a BTL mortgage will need to go through a different process than residential applicants who are based locally. They will need to establish your affordability, income, and credit history. The latter can be tricky if you have lived abroad for some time as you will have less financial ties in the UK.

But you can increase your chances of getting a BTL expat mortgage.

Here is how:

You will need evidence of a job. The lender will usually ask to see evidence of a contract of employment. If you are self-employed, you will need to provide proof of your accounts which have been prepared by an internationally recognised accountant.

It is entirely in your favour if you apply for a loan that will be paid by the time you reach 70. Many lenders will cut the length of their mortgage agreement where later life borrowers are concerned.

Traceable credit record is desirable. Many expat buyers that have been abroad may lack a current UK credit history often this will make them ineligible for many BTL mortgages. However, if you have traceable credit records and often have some form of association to the UK like a credit card or bank account – that would be of benefit.

Many lenders will prefer that any income is paid into a UK bank account.

Many lenders do prefer to work with experienced landlords as this can demonstrate the ability to manage properties, and more importantly finding tenants.

Key differences between a regular mortgage and a BTL mortgage

BT and mortgages are not too different from regular mortgages. There are, however, some key differences.

  • The fees tend to be much higher on the BTL mortgage.
  • The interest rates on a BTL mortgage are usually higher too.
  • Typically the minimum deposit for a BTL mortgage is 25% of the property value, although this can go up to 40%.

Many BTL  mortgages will be interest only. This means you will only be paying the mortgage back each month and not the capital at the end of the mortgage term you will need to repay the original loan in full. There are BTL mortgages available on a repayment basis so do your homework.

If you wish to let the property to a close family member, for example, a child or grandchildren, these will be referred to as a consumer buy to let mortgage and are assessed according to the same strict affordability rules as a regular residential mortgage.

Deposit sources

When it comes to BTL mortgage a lender will prefer that you have your own deposit available from your own sources. However, some lenders will be happy to accept a gifted deposit from a relative friend or third-party.

Typically the following are accepted:

  • Savings in account UK or overseas depending on the country.
  • Sale of property in the UK or overseas depending on the country
  • Equity in another property
  • Investments are stocks and shares in the UK.
  • Applying for BTL mortgage

When dealing with significant financial transactions, you must take steps to protect your money.

  • You should seek legal advice from a lawyer who is independent of everyone involved in the deal. This includes the developer, the estate agent, and the seller.
  • Buy to let insurance may be mandatory for some lenders, a lack of insurance does pose a financial risk to the lender.
  • Ensure that your lawyer is fluent in both English and the local language, and it helps if they are specialists in property law.
  • When appointing a UK legal firm, you must check that they are registered with The law society in the UK and that they are specialists in international transactions and property.

Ensure that any of your payslips are translated into English; it is best if you pay for this to be done professionally.

Applying for a BTL mortgage isn’t too complicated provided you have all of the proof required, and a deposit ready. 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.