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david13

Expat mortgage Vs Waiting to return to the UK

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Hi everyone, I am looking for some advice. I am an expat living in the UAE with my partner. We looking to buy in North West London (where she is from) with an expat mortgage, rent it out for 1-2 years before returning back to live in it. We would have 40% of the property price for a deposit and both have teacher jobs in the UAE. 

From what I have seen online Expat mortgages are more expensive and have a lot of fees associated, therefore the question I have is should we go ahead with an expat mortgage and then when we return to London change to a lower cost mortgage rate (if that is possible?) or should we keep saving and buy in a few years when we return, however my fear with this is that prices may rise and we may be forced to rent for a year when we return in order to get a mortgage. 

I would really appreciate any advice anyone can offer as this would be our first property.

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Hi @david13

In terms of what you're looking to do, this is a common scenario for expats and there are plenty of lenders in the marketplace who should be able to assist you (Depending on your exact scenario and the lenders criteria). 

You are correct in thinking that mortgage interest rates are slightly higher for expats, but there are not always large fees associated with these products. For example, one lender is currently offering a 2-year product with an interest rate of 3% and a £999 arrangement fee. 

If you would like some more information and perhaps indicative rates for you to accurately consider your decision, then please do let me know. I would be happy to present you with a couple of options. 

Another factor to consider in your decision is the additional 2% stamp duty surcharge for non-UK tax payers buying property in England, which is coming into effect in April 2021. I am not a tax adviser by any means, but clearly this would increase your capital input if you were to purchase after April 2021. 

 I hope this is helpful and please see my contact details in my signature below.

Best regards 

Nathan Cole


Nathan Cole CII (MP)

Mortgage Consultant at Private Finance

Office: +44 (0)1743 211 855

Email: nathan.cole@privatefinance.co.uk

Website: www.privatefinance.co.uk

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Hi David,

A friend of mine is an expat and lives in the UAE. I recently helped him purchase his first investment property in the Midlands.

He worked with a broker who secured him an expat mortgage. The mortgage is with Tipton and i think his interest rate is around 3.25%. This may seem quite high, but as you rightly point out, expat mortgages can be a little more expensive. However, the rates may have decreased slightly since the Bank Of England recently dropped interest rates.

If i was you, i would look at getting a 2 year fixed expat BTL mortgage, then when you get back, remortgage to a residential mortgage then live in it (thus reducing the interest rate massively). The extra you pay due to the expat product is offset against the rising property prices over the next few years that you are concerned about, and at the same time you are also getting some rental income.

Cheers

Onkar

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8 hours ago, onkar said:

Hi David,

A friend of mine is an expat and lives in the UAE. I recently helped him purchase his first investment property in the Midlands.

He worked with a broker who secured him an expat mortgage. The mortgage is with Tipton and i think his interest rate is around 3.25%. This may seem quite high, but as you rightly point out, expat mortgages can be a little more expensive. However, the rates may have decreased slightly since the Bank Of England recently dropped interest rates.

If i was you, i would look at getting a 2 year fixed expat BTL mortgage, then when you get back, remortgage to a residential mortgage then live in it (thus reducing the interest rate massively). The extra you pay due to the expat product is offset against the rising property prices over the next few years that you are concerned about, and at the same time you are also getting some rental income.

Cheers

Onkar

Thank you @onkar, that is a massive help.
 

When you were helping your friend, how long did the process take. I was planning on getting the mortgage at the end of the year (as my partner is moving jobs in August and didn’t want to be trying during that process). Higher stamp duty fees for non-residents are coming into affect in April 2021, and I am trying to work out if I can get the whole process complete by then (that’s hoping her changing jobs won’t be an issue with a mortgage provider). Do you think it could be completed in that time? 

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4 hours ago, david13 said:

Thank you @onkar, that is a massive help.
 

When you were helping your friend, how long did the process take. I was planning on getting the mortgage at the end of the year (as my partner is moving jobs in August and didn’t want to be trying during that process). Higher stamp duty fees for non-residents are coming into affect in April 2021, and I am trying to work out if I can get the whole process complete by then (that’s hoping her changing jobs won’t be an issue with a mortgage provider). Do you think it could be completed in that time? 

From Mortgage Application to Completion, his process took around 8 weeks, but obviously this can vary from case to case. There was slightly more admin and documentation required throughout the Application stage due to the expat status.

Theoretically, you could have it completed in those timescales. However,  it also depends on how long it takes you to find a suitable property, get an offer accepted etc.

But let's say by the end of November/December, you find a suitable property and have an offer accepted. Then you have 3-4 months to complete. I would say that is certainly achievable (subject to successfull mortgage application). :)

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