Mortgage for non-residents

kmmr

I was hoping the nice people on this board would be able to help me with getting a mortgage for my non-resident parents.

I have two mortgages at the moment, one on a BTL and one on my own house. There is about 25-30% equity overall between the two properties. The total borrowed is about 4x my salary, so its still within borrowable range. My partner is a contractor with ad hoc work, so his salary won't count for any multiples.

My parents want to buy a BTL (holiday letting) in London, so they can have an investment, and somewhere to stay when they are here which is pretty common. I have looked around my area and there is a thriving holiday rental market so income should be fine, but of course that is always hard to prove when you are dealing with a new BTL. They can put down the deposit, say 25%, but want to borrow the rest.

So, firstly, is it possible for them as non-residents (although EU citizens) to get a mortgage? They would easily pass all the standard checks based on their income at home, but obviously it is zero in the UK.

And if not, is it possible for me to take the mortgage in my name, but they service it. They would gift me the deposit, and then I would take the mortgage out in my name. This would take me to about 6x salary, but with two BTL's that are covering themselves for interest and upkeep costs. Or can I provide some kinf of guarantee (oh the irony!) on their debt so the mortgage company has someone to chase if needed.

Can anyone recommend a specialist lender who may offer this kind of service? I will approach my lender (A&L) but this kind of thing tends to fall into 'computer says no' territory, so wondered if anyone had any advice.

Thanks!

KMMR

CloudCuckooLand

If they want to use it, "pretty often", it won't be earning rent. Doubt a lender would want to class that as BTL.

Which brings you back to UK provable income, I suspect.

What about a bank in their own country, to utilise their income..?

kmmr

Pretty often is about 2 months a year, so enough to prevent them renting it out on an AST, but should be fine as a holiday let.

Home country is Oz, and I think lenders there may not be keen on an UK property as security. Good exchange rate though!

Is it possible to get a 6x mortgage in these times? Would the gifting of the deposit pose a problem do you think?

Typhoon2000

BTL mortages are based on estinmated rental income covering the mortgage by a certain percentage (normally around 130%), so if you have big enough deposit for the product your income is not normally relavant. If the lender does not accept foreign residents may be you get a joint morgage with your parents based on your status.

herbiesjp

kmmr wrote: »

Can anyone recommend a specialist lender who may offer this kind of service? I will approach my lender (A&L) but this kind of thing tends to fall into 'computer says no' territory, so wondered if anyone had any advice.

Thanks!

KMMR

You are going to need specialist advice with this one.

You will need to get in contact with a good whole of market broker to cover the whole scenario with, and see if what you/your parents want to do is possible.

The likes of A&L will not agree the application as you propose above.

Conrad

You can potentially do in your name but a letter will be required stating the gifted deposit is not repayble to your parents. Can only be done as B2L -any mention here of a part time vacation home will kill it dead.

A couple of lenders could potentialy do it in there name, but not easy.
A holiday home is a poor investment compared with a property that will be let out year round. Sometimes better to have a proper 12 month income yielding investment and then just use hotels / your house when here.
I know someone who gets 10.5% by letting new property in Kuala Lumpa - closer to Aussie!

kmmr

To be honest it is not really being done for investment purposes. The primary desire is to have somewhere nice to stay when they are here, but at the same time not throw money away. They normally stay at cheap hotels or in my spare room, but there is limit on how much we can cope with each other!

They may end up staying for longer periods, and it makes for a nice side business. We are a property family, so are well used to renting out houses in Australia and here.

Good to know not to mention it is a holiday rental! I can demonstrate that we normally rent things out long term.

For regular BTL mortgages, how do you prove/demonstrate the rental income? Would a letter from a local agency do the job, or do you need more. My other BTL used to be my residence, so I have never bought a BTL directly.

Thanks for your help.

herbiesjp

Sorry - but you have to be totally upfront about the application and the use of the property.

If you are not 100% upfront you could be laying yourself open to a charge of fraud, and breaching the T&Cs of your mortgage.

kmmr

herbiesjp wrote: »

Sorry - but you have to be totally upfront about the application and the use of the property.

If you are not 100% upfront you could be laying yourself open to a charge of fraud, and breaching the T&Cs of your mortgage.

Fair call. In that case I get the information as a holiday let. I assume the coverage ratio for a holiday let assumes a much higher vacancy rate, which is offset by the higher rents charged.

So - the same question then - how do I go about preparing this? I can do some of my own analysis based on rates and occupancy as you can see this online for holiday lets, but will a mortgage provider accept that?

GMS

You will need to find a lender who will allow the holiday use. A Buy to Let is assessed as a fully occupied property so applying for a BTL to use any other way is fraudulent.

You say you have other properties. Could any funds be raised on these to purchase the new property?

Do not try to get around the usage by applying for a BTL. It could have serious consequences and mean no further mortgages, and a possible conviction.

kmmr

GMS wrote: »

You will need to find a lender who will allow the holiday use. A Buy to Let is assessed as a fully occupied property so applying for a BTL to use any other way is fraudulent.

You say you have other properties. Could any funds be raised on these to purchase the new property?

Do not try to get around the usage by applying for a BTL. It could have serious consequences and mean no further mortgages, and a possible conviction.

Don't worry - I have no plans to tell anything other than the truth, just working out the right way to approach it. I rely a lot on my credit rating and borrowing capacity, so I just want to think about the best way to get a good result.

If needed we could find the money to buy somewhere, but I am just seeing if there are better options. Leverage makes you rich dontcha know! :p

Any idea on who may allow holiday let mortgages?