Buying property on the Isle of Man often involves paying a higher purchase price than you might expect for an equivalent property on the mainland. But with tax reliefs, a slightly different fee structure and more generous lending criteria, mortgages needn’t cost the earth.
In this article we’ll explain how Isle of Man mortgages work, who is eligible and why speaking to a specialist broker is your best route to the deal that best matches your situation.
Can anyone get a mortgage for a property on the Isle of Man?
Yes. But there are certain requirements you must meet first. There are no immigration borders between the Isle of Man and the mainland UK, and lots of UK banks and mortgage providers offer loans to buy property on the island.
However, you can only buy a home if you meet at least one of the following criteria:
- You were born on the Isle of Man
- You have a Manx-born parent who lived on the island for the first five years of their life
- You have been living on the island for at least five years
- You are married to an Isle of Man worker
- You completed your full-time education on the island and have remained living there
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What are the rules and lending criteria?
Aside from the requirements set out above, the lending criteria for Isle of Man mortgages are broadly the same as those for any other type of home loan. For more details on these, read our guide to mortgage applications.
However, mortgages for property on the island must be arranged via a provider based in the Isle of Man. Often, this means you can still borrow from a mainstream lender but will need to deal with a local subsidiary of one of the major UK banks.
Before buying a property, you will need to obtain a mortgage in principle. To do this, you should speak to a broker with deep knowledge of the Isle of Man mortgage market. They will be able to advise you on how to get your mortgage in principle and how to proceed once you have it.
There are also local lenders that may offer more competitive rates depending on your circumstances.
A minimum deposit of 5% is required to get a mortgage on the Isle of Man but some lenders insist on a deposit amount of at least 10%. So, if you can stretch to a 10% deposit, you open up a larger pool of lenders and may be able to access more competitive deals.
As with all forms of secured borrowing, the bigger the deposit you can put down, the less of a risk you are seen as, and the better rate you can secure.
How a broker can help get you the best deal on the Isle of Man
The unique eligibility criteria, necessity to employ an advocate and requirement to find an on-island lender, can make buying property on the Isle of Man seem quite daunting. But with an experienced and knowledgeable broker onside, you can buy with confidence.
We work with brokers who understand the Isle of Man mortgage market inside out. Not only will they be able to help make sure you get the best deal possible, but they’ll also guide you through the entire process from initial enquiry to stepping over the threshold of your new home.
To speak to an expert Isle of Man mortgage broker, get in touch today.
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Tax implications of buying a property in the Isle Of Man
Whilst the mortgage process in the Isle Of Man tends to mirror that of the UK, it is a self-governing territory in its own right, particularly with regards to its tax laws. For buying a property – with or without a mortgage – this can be a relevant factor, as outlined here:
Do you pay stamp duty?
No. UK stamp duty is not charged on Isle of Man properties as the island has its own government legislature. You will, however, need to pay a registration fee which is effectively the same thing.
Other fees you will need to factor into your cost calculations include:
- Search fees
- Land Registry charge
- Legal fees
However, no wealth tax, capital gains tax or death duty are payable on the island.
Tax relief on Isle of Man mortgages
To buy a property on the island, you must instruct an advocate to purchase the property on your behalf. Subsequently, this allows you to claim tax relief on the mortgage rate paid by the company.
This tax relief also extends to any unsecured borrowing arranged through companies based in the Isle of Man. It is, therefore, seen as a tax-efficient way to borrow.
How much can you borrow?
The tax relief detailed above, along with lower tax rates on the island in general, mean you’re typically able to borrow more in relation to your income than you would be able to on the mainland.
To find out how much you might be able to borrow to purchase property on the island – and what the repayments could be – use our Isle of Man mortgage calculator.
Mortgage Affordability Calculator
Our affordability calculator can tell you how much you can potentially borrow from a mortgage lender. Simply enter your total household income below and our calculator will do the rest.
You could borrow up to
Most lenders would consider letting you borrow
This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.
Some lenders would consider letting you borrow
This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.
A minority of lenders would consider letting you borrow
This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.
Get Started with an expert broker to find out exactly how much you could borrow.
What types of mortgages are available on the Isle of Man?
Investors also often choose to take out buy to let mortgages on the Isle of Man.
First-time buyers on the island may opt for a guarantor mortgage to offset the deposit costs and secure a better rate. Alternatively, there are two government schemes available for those looking to buy their first home:
- First Home Fixed Scheme – Allows first-time buyers to choose from selected properties sold at a discounted price and take out an equity loan of up to 30% in lieu of a deposit.
- First Home Choice Scheme – Lets first-time buyers use their equity loan to buy from the open market, provided their chosen property has no less than 55 square metres of floor space and includes a separate bedroom and bathroom.
You will not be eligible for either scheme if you already own property, either on the island or elsewhere.
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Which lenders can help?
There are several UK banks that lend for the purpose of buying property on the Isle of Man. These include:
Rates vary according to your circumstances, method of borrowing and term. 2-year tracker rates are currently available (4th January 2023) between 4.49% and 5.3% with 5-year fixed terms generally around 5.5%.
The Isle of Man bank will also consider applications, as will other local banks. Which lender and product are right for you will depend on several individual factors.
Can you get a mortgage for a holiday home?
Yes. If you meet the criteria for an Isle of Man mortgage, you can buy a holiday home on the island.
If you plan to let out your holiday home, you will need to adhere to all guidelines laid down in the island’s Self-Catering Quality Standards booklet. A member of the Visit Isle of Man Team will need to visit to confirm all is well.
You will also need to complete a Building Regulation Application.
Get matched with a broker who specialises in Isle of Man mortgages
Taking out a mortgage on the Isle of Man does not need to be any more stressful or complicated than getting one anywhere else.
When you work with a broker who specialises in this niche, you can rest assured that you’ll get the best deal and there will be no nasty (and expensive) surprises throughout the process.
Our broker matching service will assess your circumstances and pair you up with an Isle of Man mortgage broker who is experienced in securing the best possible deals for people just like you.
To get matched with your ideal broker, call today on 0808 189 2301 or enquire online.