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UK Buy to Let mortgages for overseas investors

Looking for information about BTL mortgages for British expats? Get the right advice here.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 5th July 2019* | Published: 30th May 2019

If you’re a Brit living and working overseas, you may be tempted to invest in buy to let (BTL) property back in the UK.

Many expats earn better salaries abroad than they do in their home country, and the correspondingly lower cost of living can leave you with a modest amount of disposable income each month.

But can you get a buy to let mortgage if you live abroad?

And what do you need to think about before investing in a UK BTL?

This article covers the following:

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Can I get a UK buy to let mortgage if I live abroad?

Yes, it is possible to get a UK buy to let mortgage as an overseas resident.

Regardless of whether you are living abroad on a temporary or permanent basis, if you’re looking to get a UK mortgage while you’re away from your home country, you will need to approach a specialist expat mortgage provider.

Why get buy to let mortgages when living abroad?

The number of British expats looking to buy property in the UK continues to increase, and there has been a particular pick up in more affluent parts of the world.

Expats usually earn a generous salary and pay little (if any) tax, depending on where they are based. What’s more, some companies pay for accommodation when their employees are relocated overseas, meaning plenty of disposable income.

Many people therefore look to invest in a BTL in their home country, perhaps as a means to provide retirement income, let out to friends or family members, and / or to live in upon their return to the UK.

Risks surrounding international buy to let UK mortgages

Strict rules and more detailed administration processes means that there are far fewer lenders who are willing to offer expat lending. Issues surrounding repayments in foreign currency and restrictions on certain countries can cause further problems.

Here are some of the main problems British expats face when applying for a UK BTL mortgage:

Lenders

One of the biggest issues British expats seeking a UK mortgage face surrounds the comparatively small number of providers willing to lend.

Although there are certainly more providers offering expat home loans than there were a few years ago, a limited number of high street banks offer this product means that you may have to rely on specialist lenders and smaller building societies.

Correspondingly, expat BTL mortgages tend to be more expensive in terms of interest rates than the standard UK BTL.

Furthermore, most lenders will want you to have some form of traceable credit history in the UK.

To ensure you get the most competitive deal, be sure to contact a whole of market broker.
With access to over 100 lenders covering all niches, we can identify the best BTL mortgage deal for you as an overseas investor.

Identity checks

Expect stricter, more rigorous identity checks to be carried out if you are an expat borrower. All mortgage lenders want to know exactly who it is they are lending to, which of course can be more difficult to prove if you are based abroad.

Some providers will require that the applicant meets them in person, meaning you may have to return to the UK before a mortgage is approved. Others will dispatch a representative to your place or residence to carry out the necessary identity checks, particularly if you’re a high net worth customer.

Foreign currency and exchange rates

Following recent changes to European regulations, individuals paid in a foreign currency are subject to closer scrutiny when mortgage applications are assessed so as to reduce the risk of money laundering or other criminal activity.

While exchange rates should not be too much of a factor for BTLs (where rental income determines affordability) it can significantly impact your affordability for a residential mortgage. Some lenders will deduct up to 25% off the current exchange rate to protect against risk.

Bear this in mind if you leave your BTL property empty or have family residing in it while you are out of the country.

Blacklisted countries

The country you’re based in can also be the make or break of a mortgage application. Most lenders will have a list of countries they are happy to lend to residents of. If your home country isn’t listed then they are unlikely to consider you.

Lenders tend to be most cautious concerning countries where there are known issues with corruption or money laundering - but there may be caveats.

For example, if you’re based in a “blacklisted country” but are working for a multinational company, a mortgage provider might be happy to accept you if you can get an official employment reference.

If you’re residing in one of these countries on a self-employed basis, a lender may be more willing to consider your application provided you use a recognised accountancy firm.

What other factors impact eligibility for a UK BTL expat mortgage?

Lending criteria for BTL expat mortgage providers can vary from one company to another, but most lenders have the following requirements:

Deposit

As a general rule, most UK lenders require a minimum of 25% deposit (75% loan to value) for BTL properties. In this case however, lenders may request a larger deposit due to the associated risk and limited number of lenders supplying this product.

Depending on your individual circumstances, you may be required to put down around 30-45% of a property’s value to stand the best chance of being approved for a UK mortgage as an overseas resident.

Affordability

As mentioned, affordability for BTLs tends to be determined based on rental income rather than individual earnings. Many lenders require rent to exceed mortgage repayments by 125-145%, whereas others may take a limited amount of earned income into account.

In the case of rental shortfall, a handful of lenders may accept be happy to accept your own earnings even if they are paid in a foreign currency - provided it is on their approved currency list.

Bad credit history

When it comes to bad credit, every is different in what they will or won’t accept. Some will refuse anyone with a history of adverse, whereas others will consider even the most severe instances - in the right circumstances.

Don’t lose faith if you’ve had credit issues in the past; more often than not, the recency of the issue is the most important factor. For more information, visit our bad credit section.

Age

Older borrowers can struggle getting any type of mortgage due to the perceived risk of lending into retirement. Some providers won’t lend to anyone over 75, and others over 85.

That said, some lenders have no upper age limit, as long as they’re confident the borrower can keep up with their mortgage payments during retirement. This can work in favour of BTL applicants as the provider will be basing your application on rental rather than personal income.

Non-standard construction types

Every lender is different, but many don’t accept property that is non-standard, unique, or listed, generally because they fear the properties are higher risk and less sellable.

That said, there are lenders out there who are happy to consider a wide range of property types. See our non-standard property section to find out more on this.

How do I go about changing my mortgage to buy to let if I’m moving abroad?

This would essentially be a straight remortgage from residential to buy to let, so check out our dedicated article on remortgages for criteria information. Bear in mind though, that some lenders might be cautious of a borrower who is on the verge of relocating to an overseas territory, so a specialist provider may be required.

The whole-of-market advisors we work with have access to a wide range of lenders who specialise in BTL mortgages for customers who are relocating, so make an enquiry to speak with one of them over the phone today.

Why you should speak to a whole of market mortgage broker

We’ve helped over 82,000 people find the right mortgage, even those who may have been declined a mortgage or had bad credit history.

In fact, our customers consistently rate us 5 stars on Feefo, mainly due to our high levels of service, but also because we offer offers a 5-star service with access to expert brokers who are:

  • Whole of market.
  • Have a working relationship with all buy to let lenders, not just a select few.
  • Already know the lenders to go to for expat and BTL deals as they successfully arrange these already.
  • OMA Accredited advisors.
  • Have completed a 12 module LIBF accredited training course.

Talk to an expert about buy to let mortgages for overseas investors

If you like what you’re reading or require more information, call Online Mortgage Advisor on 0800 304 7880 or make an enquiry.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee, and there’s no obligation or marks on your credit rating.

Updated: 5th July 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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