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Expats moving fast into the buy-to-let market before Brexit

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Brokers are reporting the largest number of buy-to-let mortgage applications from expats than ever before. This is not a surprise, in general the buy-to-let market is currently booming for all kinds of reasons.

Expats see this market as value for money, bank interest rates are low and there is real potential for capital growth on any re-sale and a better income than the banks are offering.

Interest in the UK property market has seen an up surge in viewings since the turn of the year. Estate agents up and down the country are reporting an increased interest in property at the lower end of the market from expats living abroad.

Are good deals for expats available?

Well, the simple answer to that is most certainly yes. Expats are always surprised at the very good rates that are available to them. Mortgage lenders currently are fighting to secure business in a very competitive marketplace, reducing both interest rates and fees.

Brokers have seen an increase in longer term fixed rate mortgages recently as clients want to know the outgoings of their investment property. Many other types of plans are on offer and it is prudent to consider all options before deciding.

It is commonly known with buy-to-let mortgages that the larger the deposit you can put down a lower interest rate can be achieved.

Need assistance?

Our professional independent advisers are used to dealing with all types of buy-to-let mortgages and they have vast experience in this area. Please do call to discuss your requirements and we will be happy to assist.

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Brand new range to help the expat

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The Ipswich Building Society’s expat range is now available to applicants paid in foreign currencies, as those paid in pound sterling (GBP).

The new range consists of the following products and is available to direct applicants, intermediaries based in the Society’s heartland area, and members of selected networks and clubs:

• 2-year fixed rate at 3.10% until 30 September 2021 (5.4% APRC)

• 2-year discount rate at the Society’s Standard Variable Rate (currently 5.74%) minus 2.94%, giving a current pay rate of 2.80% for two years from the completion date (5.5% APRC)

• 5-year fixed rate at 3.34% until 30 September 2024 (4.9% APRC)

All products are available up to 80% loan to value (LTV) and have an application fee of £199, a completion fee of £800, a CHAPS fee of £35, and a tiered valuation fee based on property value applies. During the product period, the Society offers fee-free overpayments up to 50% of the original loan amount.

For overpayments in excess of 50% of the original loan amount, or early redemption, an Early Repayment Charge (ERC) applies. For overpayments this charge is calculated on the overpayment amount that exceeds the 50% allowance, and for early redemption is calculated on the original loan amount.

Loans are available from £75,000 to £500,000 with a maximum term of 40 years. Applicants must be employed by a recognised multinational firm and have a minimum income of £40,000 GBP or equivalent paid in any of the following 10 currencies: euro, Swiss franc, Norwegian krone, US dollar, Canadian dollar, Singapore dollar, Hong Kong dollar, UAE dirham, Kuwaiti dinar, Qatari riyal.

Affordability assessments will take into consideration employed applicants as well as retired borrowers, with 100% of pension and 75% of investment incomes used when calculating affordability.

Can we help?

If you are looking for a new or re-mortgage please do make contact and one of our fully independent advisers will be happy to assist.

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Interest rates are held, good news for Expats

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The Bank of England’s monetary policy committee has voted unanimously to keep the base rate at 0.75%.

The rate has now been at this level for nearly a year, having been raised from 0.50% on 2 August 2018. The minutes reveal that the MPC has cut UK growth expectations for 2019 from 1.5% to 1.3%, and for 2020, from 1.6% to 1.3%. The MPC also believes that a no-deal Brexit would result in the sterling falling lower than its current levels along with CPI inflation increases and GBP growth slowing down.

Noting that core CPI inflation came in at 1.8% in June, the minutes add that if a “smooth” Brexit occurs and there is some global growth recovery, the committee “judges that increases in interest rates, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2% target.”

It adds that sterling would also rise in this situation.

In the accompanying inflation report for August, the bank revised several targets upwards for Q3 2019 – Q1 2020, namely that: expected mortgage approvals for house purchases was changed from 60,000 per month to 65,000 per month, the prediction that the UK house price index would fall by 1.25% in 2019 changed to rising by “just over” 2% in the year to Q1 2020, and that housing investment would fall by 0.50% per quarter would now fall by 0.25% per quarter.

Facts are we might have a new prime minister but the fundamentals in the UK remain the same, so this wait and see approach makes sense. The country is experiencing enough uncertainty and drama, with Boris Johnson reaffirming the threat of a hard Brexit, and the potential of a general election in the coming months.

The real worry is the strength of the pound, which has now reached a 31-month low. Regardless of the Bank of England’s actions, there will still be a downward pressure on sterling. A lower pound rate will benefit UK exporters, but will also raise the consumer price for imported items such as food and fuel. And since the UK is a net-importer, the poor exchange rate is going to be felt across the board.

Expat mortgages

As an expat if you are looking for a new or re-mortgage please do make contact and one of our fully independent advisers will be happy to assist.

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Expats should take note

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Mortgage rates have plummeted since January, but would-be expat borrowers and re-mortgagers are being urged to strike now to take advantage of the competitive market.

Whether you are borrowing using a two-year deal, a five-year fix or even locking into a long-term 10-year fixed rate, prices are more attractive now than they were in January.

Indeed, the data analysts, revealed those borrowing money for their home using an average two-year fixed-rate mortgage this month will have paid an average rate of 4.2% compared to the 4.45% they would have been charged in January.

Five-year fixes, meanwhile, have fallen from a typical 4.33% in January to 4.1% today.

In fact, it’s much better to be a borrower than a saver as whilst prices are falling on mortgages, when it comes to savings the interest rates on offer have fallen since January too.

Borrowers urged to fix soon

The message from experts, for expats who might be waiting for prices to go down further, is to consider fixing their mortgage soon to take advantage of the deals currently on offer.

Interest rates are currently low but how long this trend will continue with Brexit looming is anyone’s guess.

Expat first-time buyers should keep a close eye on their finances and be mindful that with house prices on the rise in the UK, their dream of getting onto the property ladder may be further away than first thought. While interest rates are a convenient measure to compare deals, it is important that borrowers consider a mortgage based on the overall true cost, particularly to save on any upfront fees.

Seeking out independent financial advice is a good idea to navigate the mortgage minefield.

Can we help?

If you are looking for a new or re-mortgage please do make contact and one of our fully independent advisers will be happy to assist.

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Expats are getting wiser by the day

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There was a surge in re-mortgage activity in April, May and June of this year, as expat borrowers look to lock into cheap deals ahead of an expected interest rate rise.

Since the financial crisis in 2008 mortgage rates have steadily fallen. The Bank of England cut interest rates in August 2016 from 0.50% to 0.25% – the lowest on record and the first interest rate cut since 2009 when the financial crisis was at its peak. This led to a number of lenders slashing their rates and competition in the mortgage market heating up.

However, with the Bank of England hinting that it could raise interest rates in the near future as Brexit fears take a grip, economists are predicting a hike could come as soon as November this year.

Record low mortgage rates continue to sustain market activity, many of the Bank of England’s Monetary Policy Committee are now adding to the calls for an interest rate rise, this picture could very quickly change.

A “wait and see” approach is best avoided for existing expat UK homeowners considering re-mortgaging.

The number of expat mortgages approved also went up in May and June, suggesting the market is picking up steam before the Brexit outcome is decided..

Expats who avoid reviewing their current mortgage deal could well pay for this error in the long term as interest rates look to be going upwards. Not everybody will benefit from changing their mortgage, but it certainly makes sense to check how your existing deal stands up to the future.

Contact us.

If you would like to review your current mortgage please make contact and one of our independent advisers will be happy to help.