The chances are that requiring a mortgage after you have moved to other countries would not have crossed your mind until it is the last minute and the actual facility requires replacing. Expats based abroad will feel the need to refinance or alternatively change to a lower rate to extract the maximum from their mortgage and to eventually save money.
Expats in UK
Expats who are based offshore additionally become a tad ambitious as the new circle of friends they interact with are busy creating property portfolios, and they eventually find that they now want to begin releasing equity from existing properties to expand on their portfolios.
Since the 2007 crash seen in the banking sector and the inevitable takeover by UK taxpayers of Lloyds and Royal Bank of Scotland, buy-to-let mortgages for expats have disappeared at a quick rate or completely altogether, with individuals struggling to obtain a mortgage to effectively replace their existing facility. This is regardless of whether the refinancing is aimed at releasing equity or lowering the existing rate.
There are several mortgage brokers that are based abroad and that specialise in sourcing of mortgages for expats who are based overseas but are still holding property in the United Kingdom. Lenders from Asia will eventually enter the mortgage market with an enormous tranche of funds that are based on a select set of criteria that will in reality be loose to attract the maximum number of clients.
Post usage of this tranche of funds, they might sit out for some time or issue fresh funds in the market, albeit with more select criteria. It is quite common for a lender to offer nearly 75% to London’s Zones 1 and 2 on the first tranche. Then, on the second tranche, they offer 75% to select postcodes of Tube Zones 1 and 2 or even cut down maximum lending to nearly 60%.
These lenders are obviously favouring UK’s growing property giant: London. With growth in some regions in the last one year alone at up to nearly 8.6%, it is no wonder that Asian lenders are releasing their money to the property market in the UK.
Interest-only mortgages for offshore clients is largely a thing of the past. Due to perceived risks, if there is a market correction in the London and UK markets, lenders are not willing to take any chances and most of them seem to be offering only Principal and Interest mortgages, also known as Repayment mortgages.
The thing to keep in mind is that these criteria are always changing and will never cease to change as they are eventually adjusted towards the banks’ individual perceived risk parameters, which change on a monthly basis, depending on if any clients have missed out on payments towards their mortgages or defaulted totally on the mortgage repayment.
Possessing knowledge of what is happening in such tight markets can be the difference between obtaining or being refused a mortgage or ending up with badly performing mortgage with skyrocketing interest repayments when you could be eventually paying a much lower rate with other lenders.