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Latest data from the Nationwide Building Society show that UK house prices fell by 0.2% in June and annual house price growth slowed to 3.3% from 4.6% in May. Robert Gardner, Nationwide’s Chief Economist, said “This maintains the gradual downward trend that has been in evidence since mid-2014, though this is the smallest annual rate of increase for two years. House price growth continues to outpace earnings, but the gap is closing, helped by a pickup in annual wage growth, which moved up to 2.7% in the three months to April from 1.9% at the start of the year.”
The UK housing market is showing signs of cooling down: this is good news for expats working abroad but wanting to buy a property in the UK, sometimes with a view to renting it out until they come home. But how easy is it to get a mortgage if you are based overseas? The answer is that not all lenders offer competitive mortgages to expat buyers, so finding the right deal for your individual requirements can be difficult.
The lenders’ stance can be explained by the fact that expats do not having a track record in the UK if they’ve been out of the country for a while. That creates issues for the lender when it comes to checking credit history through reference agencies, as three years’ address history is usually required for a good credit score.
But more enlightened lenders know that many expats are often a better credit risk than UK-based borrowers because they have fixed-length work contracts, high tax-free income and attractive benefits packages such as subsidised accommodation and travel. All of these factors increase disposable income and improve mortgage affordability, whether residential or buy to let (where landlords still need to be able to cover rental voids).
We are seeing an increasing number of expat borrowers becoming first time buy-to-let investors, joining the investors who are building property portfolios, often by releasing equity from capital appreciation on existing properties to help fund the next purchase. There is no doubt that better deals are available to those borrowers who have larger deposits.
The expat mortgage market is definitely looking up and there is now a wider range of deals for expats wanting to buy in the UK than any time since the credit crisis.
Next steps
If you are an expat looking for a substantial mortgage to purchase property in the UK, we recommend you take independent specialist advice from a broker who is used to regularly arranging such mortgages with specialist lenders, many of whom you will not find on the High Street or outside their regional base. It is likely to save you time and money and mean that you can afford to buy or remortgage your property on terms that suit your financial circumstances.
Private Finance
Email info@privatefinance.co.uk or call 0800 980 8777.