British expats who want to make some money from investing in buy to let from overseas have a new lender in a dwindling market.
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Few lenders offer borrowing to expats because someone living overseas fails a UK credit check and is outside the arm of the law if the deal goes sour.
However, Skipton International, the offshore arm of the Skipton Building Society, is going against the trend of reducing deals for expats by launching a new buy to let mortgage range.
Getting hold of an expat buy to let mortgage from the Skipton is a bit of a chore – applicants have to answer ‘yes’ to 20 screening questions before an application is considered.
Key questions include:
- Expats applying for a mortgage cannot live in 97 ‘excluded’ countries – including many popular expat destinations like Saudi Arabia, Qatar and South Africa
- The mortgage cannot be for a property that the expat plans to live in at any time
- Expats must have a UK bank or building society account – which precludes thousands of expats who are unable to hold a UK account because they are tax resident elsewhere
- The property must be located in England or Wales
Loans from the Guernsey-based lender are up to 75% loan-to-value (LTV). Interest rates are not quoted, but an example on the Skipton’s buy to let factsheet is priced at 6.49%.
Skipton International’s Nigel Pascoe explained offering buy to let loans was a ‘natural extension’ of the company’s current mortgage range for expats.
“UK property investment makes good sense for many British expats. House prices have risen over the long term despite setbacks and many expats want to put money into property as an alternative to a standard pension,” he said.
Expats seeking mortgages to buy a home in the UK or to invest into buy to let have seen their choice of providers shrink over recent years.
The largest provider, Lloyds Bank, pulled out of the market in 2012.
Few lenders will entertain mortgage applications from expats.
Those that do include HSBC, NatWest, Kent Reliance and two small building societies offering niche loans – Saffron Waldon and the National Counties.
Wealthy expats have a slightly easier time raising finance for home and buy to let purchases through some private banks.
The government has makes expats pay higher taxes on house purchases and plans to remove the capital gains tax exemption for overseas property owners in April 2015.
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