There can be two different categories of ex-pats:
- people working abroad for a period of time, often for a large international company and who intend to return to the UK
- people who have become resident in a overseas country and are not looking to return to the UK.
In both instances Bond Finance can help for investment property purchases and re-finances, and releasing equity from existing UK properties.
Generally the lenders require:
- the applicant to have a UK bank account
- the applicant to have a minimum personal income of £50k sterling equivalent
- 25% deposit available for a purchase
The main issue for any bank is credit searching and scoring since UK banks do not search outside of the UK. In particular a bank needs to locate a person at their home address in the UK over the last 3-6 years. If the ex-pat has been living aboard for over 6 years there is a very slim chance they can locate them. This is perceived as a high risk to the bank. This is why a lot of ex-pat lenders like you to have existing property in the UK. They also like there to be at least some existing debt, so that they can carry out some assessment of how you conduct your credit accounts.
We are able to fund ex-pat BTL purchases and re-finances and also short term refurbishment loans, which you can either repay with a sale of the property, or a re-finance to a long term lender.
Please see below a few case studies.
Scenario 1: Ex pat Buying another property in the UK
An English couple emigrated to Perth and after a couple of years they decided that they wanted to buy a property for investment purposes in the UK. They were renting out the property that had been their main residence in the UK and they had two other investment properties. One of these investment properties was valued at £500k with £150k mortgage and the other one was valued at £400k and had a mortgage of £120K. The fact that they already owned investment properties in the UK and they could demonstrate that they were renting them successfully whilst living in Australia provided Shawbrook Bank with the comfort it requires to lend to them. They could also demonstrate that their UK mortgage accounts were well-maintained. Between them they had an earned income in excess of the equivalent £50K.
They used a local agent in the UK to identify a property which would be suitable for investment purposes. The purchase price for the new property was £400K. The purchase had to be made without sending cash to the UK.
We used Shawbrook Bank to refinance one of their existing UK investment properties, which raised sufficient cash to repay the existing lender, provide a 25% deposit for the new property and pay all of the fees and taxes. At the same time we arranged another loan from Shawbrook Bank £300k to assist with the purchase of the new property. The second existing investment property was not needed for this transaction and remains available to be used to assist with a subsequent property purchase.
Scenario 2: Expat buying refurbing and selling property in the UK
An English ex-pat retired to Brisbane and has a property portfolio in the UK. The rent from this is his primary source of income. He is benefitting from the fact that his mortgages are at exceptionally low rates. His brother lives in the UK and he has had some experience with buying a refurbishing properties in the UK. The brother could demonstrate that he made a profit from buying, refurbishing and selling a couple of properties. The ex-pat wanted to use the considerable equity in his UK properties to work on similar projects with his brother. The brother in the UK identified a property and agreed a purchase price at £250K. The project costs were £100K and the post-works value was £475K.
We arranged Ex-pat short term refurbishment finance. We arranged a first charge loan of 75% of the purchase price of the new property. The brother in the UK provided the 25% deposit. The ex-pat offered up one of his UK investment properties for a second charge loan using the same lender and this amount of money was sufficient to cover the rest of the project costs. (In fact had he offered an additional property, a second charge loan against this would have also provided the money for the deposit and neither brother would have needed to use any of their cash). By using a second charge loan against an existing property the current first charge mortgage on favourable terms was not disturbed. 7 months after buying the property, it was successfully sold at £480K. The second charge was released and the brothers were able to split the profits. In fact, the property was bought via an SPV (Special Purpose Vehicle and in this case - an on-shore UK Ltd company set up specifically for the purpose of buying and selling properties) and the profits were kept within the company. The brother then went on to buy another property and repeat the process.
Scenario 3: Foreign National buying property in the UK teaming up with a property expert.
An Australian professional living in Melbourne earning $150k pa. He had $180k (Aus) in cash and he wanted to invest in the UK property market.
We introduced him to one of the property professionals we know in the UK, who are happy to do JV (joint venture) property projects with other people. We regularly speak at UK property investment club meetings and we are recognised as expert brokers for PIN (Property Investment Network) member. Following this introduction, a property company was set up and a property was purchased. The project was to buy a residential property and to convert it to an HMO (House of Multiple Occupancy) to maximise the rent. The PIN member was the “local expert”, who sourced the property and ran the project through to conversion to a fully licensed HMO. He put forward one of his existing properties for secondary security. He now manages the newly created HMO property alongside his own HMOs. The Australian professional, was “the investor”. He supplied the cash required the costs of the conversion works and various fees. We arranged the finance. Both parties are shareholders and directors of the company. They are continuing to make more acquisitions using this model.