Expat UK homeowners are collectively wasting millions a year by failing to re-mortgage before their current deal expires.

A third of expats whose fixed rate or tracker mortgage ended in 2017 ended up on their lender’s standard variable rate (SVR) for an average of six weeks.

Their failure to line up a new mortgage before their existing one expired cost them an average of £750 a year.

Why is this happening?

When fixed term mortgages come to an end, expat homeowners are automatically put on to their lender’s SVR, also known as a reversion rate.

The interest charged on SVRs is typically significantly higher than the rates available on new deals, meaning expats end up paying over the odds for their home loan until they switch to a new mortgage.

While it is not known exactly why expats are sitting on an SVR it is likely to be because they have failed to realise their mortgage term is coming to an end or have not left enough time to switch to a new deal before it expires.

Does this affect you?

Expat UK homeowners should start thinking about a new mortgage three to four months before their current deal expires.

The re-mortgage process typically takes between six and eight weeks. It is usually quicker if people are taking out a new mortgage with their current lender, while things tend to take longer if they are moving to a new lender.

New mortgage affordability rules were introduced in April 2014, so homeowners coming off five-year fixed rate deals may find the application process tougher than when they last applied.

The good news is that most lenders will allow you to secure a new mortgage deal three months before your existing one expires, enabling people to start the re-mortgage process well before their current deal runs out.

Background

Seven out of ten expats who took out a mortgage in 2017 opted for a fixed rate deal.

Fixed rate mortgages give borrowers the security of knowing exactly what their monthly repayments will be.

Help required?

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

Approvals for house purchases in the UK by expats increased towards the end of 2017 and 2018 has followed the same pattern according to the latest figures from the Bank of England.

The number of expat loan approvals for purchasing so far this year is up a massive 21% on the same period last year. Re-mortgaging saw an astonishing increase of 41% over the same period.

The next few months are likely to be less active, but at present we can confirm business is very active with the buy-to-let market surprisingly leading the way. This activity seems to be powered by the Brexit ongoing negotiations with expats feeling they want a property in the UK more now than ever before.

Re-mortgaging in the expat market continues to be very buoyant as homeowners look to lock in advantageous interest rates which are still currently on offer. These rates are likely to disappear as the year progresses if the experts are correct as a rate rise is expected.

Why re-mortgage?

There are many reasons you may wish to consider a re-mortgage and it is without any doubt something every expat homeowner should consider, especially if you are stuck on your current lenders standard variable rate. It is not always best advice as your current deal may have conditions that are not beneficial to re-mortgaging, but you should take time to review on a regular basis. So why re-mortgage?

• Secure a better rate of interest than you are currently paying.
• Change current deal to a fixed rate for long term security.
• Raising capital from equity within your property.

Need assistance?

Our professional team of fully qualified advisers are used to dealing with all types of expat re-mortgage/mortgage business. Please do call to discuss your requirements and we will be happy to help.

 

Expat mortgage lending is forecast to reach the highest level since the financial crash of 2007 despite Brexit uncertainties, according to the latest annual market review.

If all the predictions are correct, 2018 will see the eighth year of expat mortgage lending growth.

A great deal of this growth will be driven by re-mortgage activity, figures would suggest the expat has become a great deal wiser of late and making the most of lower interest rates.

Expats buy-to-let lending looks like recovering in 2018 and 2019 despite the adverse tax changes for landlords. Again, this growth is likely to be driven by a strong re-mortgage market and an improvement in house purchase lending brought about by a higher level of “churning” in the market.

Lending via intermediaries/brokers is also expected to increase again as expats look for help in securing their mortgages. Broker activity has grown rapidly over the last 3 years as tighter lending rules have come into force.

The forecasts are based on an analysis of current trends within the housing market.

Despite the recovery of the housing market and the availability of mortgage finance since the last recession, stricter affordability rules are limiting activity which makes the figures and predictions even more promising.

UK property values in 2018

According to the latest figures house prices are still on the rise, January and February saw an average 2.3% increase (except London) as the UK economy continues to strengthen even with the Brexit situation.

It is expected that house price increases will level out as the year goes on with a steady and reliable growth rate, again spelling good news all round.

Business in the expat sector continues to increase year on year, even with all the recent Brexit news and negativity. One expat we spoke to said, “the spare cash I had left over has been invested in a UK property as leaving it in the bank was not an option due to the interest rates on offer”. “I now let the property which gives me a little income after tax and interest payments, but mainly I am interested in the increased property value”. “Currently if I was to achieve the full sale price I will have made a very good profit on the deal even after any capital gains taxation due”.

Expats have an excellent choice of mortgage deals available and there should be one to suit most needs. It is vital when you are taking out a mortgage that you ensure the deal you are getting is right for you, it is recommended to seek specialist expat broker advice as this is a complex market.

Why use an expat specialist broker?

There’s an awful lot to think about when choosing the right mortgage. It’s not as simple as just opting for the cheapest fixed or tracker rate mortgage you can find.

Mortgage brokers must be qualified to give you mortgage advice, whereas you may not get that kind of guarantee if you ring up a lender’s call centre.

On your side

An independent mortgage broker will look for the best mortgage for you. They aren’t on the lender’s side, they’re on yours, and they’ll give you access to far more products than if you went direct. You’d get unbiased advice and would be able to choose from a range of lenders and subsequent products.

Need some assistance?

If you require any help with your mortgage or re-mortgage, please call one of our fully qualified advisers and we will be pleased to assist.

The triggering of Article 50 has been well telegraphed, so for the housing market, it’s more about how the subsequent negotiations go. To date we are all getting very mixed messages as to the general outcome of the talks. One thing is very clear, the expats living overseas currently are not panicking in the slightest as expat mortgage business is very buoyant indeed.

A recent poll taken of expats found that 72% have no concerns as to the outcome of the Brexit negotiations. The poll also revealed expat UK property owners are confident their UK holdings will be generally unaffected by Brexit.

What about the mortgage market?

The market so far has been largely unmoved by Brexit. Lenders have continued to maintain good interest rates across the board since last summer which indicates a lack of concern currently. The rates are very competitive and there are still plenty of high loan-to-value mortgages available to expat consumers.

UK property values after Brexit

The property market in the UK is currently slowing down compared to a few years ago, but it must be said values are still increasing albeit at a slower rate. If you are an expat who has invested or looking to invest in the UK property market you can draw strength from the historical figures. It is very unlikely in the next 20 years we will see things change drastically due to the demand still being as strong as ever for quality UK property.

The way forward

As an expat living overseas with property and a mortgage in the UK it would be very advisable to get your current mortgage checked to ensure it will meet the ongoing needs.

Assistance?

If you would like to discuss your mortgage requirements, please do make contact and one of our qualified advisers will be happy to help.