Investing In The UK From Overseas?
We want to get started in property with our first UK buy-to-let (BTL). I am not a UK national, although my wife is British, but has been living outside UK for the last 3 years.
We had some discussions with a property company, who recommended putting the property in her name as we can get better rates. However, I’m not sure if she is considered as a UK resident while living overseas?
As far as income qualification, my wife will be working 3 days a week from September and her salary will equate to £24K take home. Will this limit our lenders as that puts her below the £25K income requirement lenders have or is there some flexibility?
I have been told that we will need to show that our BTL will get 30% more rent than our mortgage. Is this correct? And if so, how do we prove this? Does the lender do a valuation, which also included an anticipated rental?
Investing in property when you are a resident overseas throws up some additional barriers.
- The primary criteria of the vast majority of UK mortgage lenders are that the borrower/s be currently resident in the UK - you both fail these criteria, excluding you from all these lenders.
Being a UK national, but living outside of the UK does not overcome these criteria, so the property company you spoke with are misinformed. More accurately a UK national living abroad could get a mortgage, whereas a non-UK national with no ties or history with the UK could not.
This gap is filled by lenders offering mortgages to UK expats, recognising the desire for UK nationals living outside of the UK to own property within the UK, usually in advance of their eventual return.
- An annual income of £25K is a threshold that many, but not all, mortgage lenders impose - the rationale being that you will get tenancy void periods at some point during your mortgage term, where you will be required to make the mortgage payment from your personal income, in order that you don’t fall into arrears. They consider sub £25k earnings impacts on your ability to do this. For the lenders operating this threshold, you either hit it or you don’t - 'close but no cigar' applies here.
For joint applications, the £25K threshold often equates to both borrowers' incomes.
The basic premise of all BTL mortgages is the lender’s requirement for the rental income to exceed the monthly mortgage payment. Different lenders have different overages, and sometimes different overages for different products too.
25% overage is the most common, but some products have a 45% overage.
BTL mortgage lenders require their valuer to not only value the property, but to give their professional opinion on the rental income the property will generate.
The key message here is that you really need to speak to a broker who is experienced with lending for expats.
Here is a video on my YouTube Channel discussing "The Easiest Way to Build a BTL Portfolio on a Budget"
You can learn more here: