Getting a buy to let mortgage on an existing expat property

If you’re moving overseas to take on the expat job of a lifetime, what’s the best way to cope with your UK property?

Moving overseas to take on a career-enhancing position isn’t something the vast majority of ambitious Brit professionals could refuse, but the complication of having a UK home and keeping it can cause a dilemma. Selling up is the obvious solution, but there’s the chance of the new job not working out and causing an unscheduled return to the home country. Making the right decision is even more tricky if the new contract is somewhat short-termed.

Nowadays, more and more expatriate professionals are deciding to keep hold of their UK homes as a bolt-hole against unexpected issues overseas, with the best option being renting out through an experienced agent familiar with the process. The do-it-yourself approach is complicated and can easily go very wrong, often necessitating an emergency leave from the new job in order to return and sort out the mess. One easy mistake is to simply let the property without ensuring the mortgage allows renting out.

First-time landlords often make the mistake of not checking with their mortgage provider as to the legality of turning a family home into a buy-to-let. Many mortgage providers will allow letting for a period of no more than one year, but subsequently a new deal will need to be negotiated, requiring a visit to the home country and a good deal of hassle. Nowadays, many UK mortgage providers aren’t happy about lending money on buy-to-let properties when the owner is living overseas.

One difficulty is that some lenders are fine with letting if it’s to another family member, with others refusing a loan if there’s a possibility of the owner moving back into his own home. A few simply refuse to lend to British expats living in certain countries overseas, even if the applicants are on shorter-term contracts, and others only consider UK-based earnings. In this case, if the rental return covers the monthly loan repayments it’s possible, but if it doesn’t then the deal’s off.

One way for newly-departed expat home owners to get round this is to limit buy-to- let mortgage applications to building societies rather than UK banks. It’s a slightly more expensive option, but is far more convenient and suitable for expat property owners. Credit checks and other bureaucratic matters notwithstanding, everything is carefully explained to applicants and, in the main, the process is straightforward. A choice between straight buy-to-let mortgages and resident mortgages is available, with the latter taking the added overseas cost of living into account as well as fluctuations in the exchange rate.