Mortgage for Expatriate?

nathan1986

Hi all,

I have been doing some recent research about mortgage's in the UK for People living overseas.

Early 2010 I was made redundant and by chance was offered a job in Queensland, Australia. 18 months on and a lot of hard work and we have managed to gain residency (a battle in itself) and been saving hard.

Now to cut a long story short, we want to have some form of investment property for the future, We would like a buy to let mortgage sometime in the near future.

We both earn resonably good money here in Australia. I have a full time job and my OH works for herself also earning great money. We are great savers, we manage to save almost all of our spare money and now we have payed our solicitors fee's etc for residency here we have spent since May saving, currently saved over £5000.

We are not looking for a huge mortgage, just a foot on the property ladder, a property in the region of £100k is a realistic figure. Once we have 25% deposit we plan to look.

You may be wondering why we plan to buy in the UK, well in Australia prices are expensive, not to mention that interest rates are also much higher. It is also Tax efficient to have an investment as you can set up negative gearing

for example:

If your mortgage on a property costs £500 per month and your rental income is £400 per month the I would have to pay the shortfall. Over 12 months this would be £1200. At the end of the Tax year this is taken into consideration and seen as a loss against other income.

Anyway, my question is about anyones experience with this sort of mortgage, i have spoken to a specialist who advised me it is possible but they charge fee's just for application so I thought id come on and see if anyone has any ideas about possible Lenders?

Thank you

Nathan

holly_hobby

Your residency from ex-pat may cause an issue .. but check out the following ...

BM solutions may be able to assist - http://www.bmsolutions.co.uk/products/international/

Also try Barclays Internaional - http://www.barclayswealth.com/international/mortgages-loans/expat-mortgages.htm

Usual ex-pat critria is set to return to UK at some point, UK bank acc, and employed by multi national co (no self emp).

Tax wise Austraila & UK have a double taxation treaty in place, link for ref - http://www.hmrc.gov.uk/international/australia-index.htm

If you intend to remain a perm resident of Oz, then you may be better seeking finance from an Aus bank whom also operate in the UK. For example - National Austraila Bank own Yorkshire Bank in the UK whom also operate BTL mortgages - worth a try ?

Have tried to provide as must useful assistance as possible, should you find a suitable lender, you then need to consider how any let will be managed and the implications of being an overseas landlord.

Lots to consider very carefully and not for the faint heared I fear ...

Holly

Thrugelmir

nathan1986 wrote: »

for example:

If your mortgage on a property costs £500 per month and your rental income is £400 per month the I would have to pay the shortfall. Over 12 months this would be £1200. At the end of the Tax year this is taken into consideration and seen as a loss against other income.

Fail to see the logic. As any tax saving is outweighed by the loss on letting the property.

Even so, as a non UK resident obtaining a BTL mortgage is a non-goer. If you have no UK assets or income.

nathan1986

Thank you for your replies,

Holly Hobby - Excellent idea about approaching NAB, I did not know they oen Yorkshire bank. I will definately look into this further. Barclays International may also be worth looking into.

Im not too worried about being an overseas landlord as I still have all of my Family in the UK and my Dad is happy to act on my behalf.

I know some ex-pats here who chose to rent their property out in the UK as opposed to selling up when they left for Australia and they have people managing their property for them too.

I appreciate there is a lot to consider and I will do so very carefully.

Thrugelmir - I pay tax on my income, so I would pay less Tax and own a property at the end of the term? Other costs that are incurred would also become Tax deductable including any renovation/maintenance work required. One other key benifit is that flight too and from the UK can be classed as a business trip and would also be tax deductable. (I travel home at least once a year)

I did forget to mention that long term I will be returning to the UK. We plan to move home either perm or for the time when we have a young family and come back before they start school.

I guess I should mention the bigger picture, Im trying to invest money in general and figured that this may be a good way to do it. If you were in my shoes? What would you do? Im open to all suggestions, its early days and I want to make sure i consider all the best options.

Thank you

Thrugelmir

nathan1986 wrote: »

I pay tax on my income, so I would pay less Tax and own a property at the end of the term?

Only the interest element of the mortgage payment is tax deductible. Under UK tax rules.

So to repay the capital balance you will need to make a taxable profit. As capital is paid out of after tax income.

The boom years of BTL recently were based on appreciating capital values, i.e. interest only mortgages. Few recent investors have a plan as to how the capital will be raised to repay the mortgage at the end of the term.

Isn't the rate of basic income tax higher in Oz than the UK?

As for travel costs, that would be an issue for the Oz tax inspectors. As you would have a UK an appointed UK Managing Agent for the property. So need to travel would be questionable.

nathan1986

Thrugelmir - Thank you. I understand now where you are coming from, I may be under a poor understanding of how negative gearing works. I thought that the whole loss would be covered as opposed to just the interest. I need to do some more research.

If you was in my position how would you invest your money or would you save?

Another motive I have for buying now in the UK is the prices being low. I also do plan to return to the UK in a few years and would like somewhere to live when I get back as i will struggle to get a mortgage until im in full time employment for 12 months.

Thank you

Nathan

Thrugelmir

nathan1986 wrote: »

Another motive I have for buying now in the UK is the prices being low.

Times have changed in 18 months you've been away. Prices are uncertain at the moment. As lack of mortgage finance and far tighter lending criteria have caused market to stagnate. Despite record low interest rates continuing.

At the current time you'd be better off depositing you money in Oz. Then buying at a later time. OZ$ - UK £ is at a very low level. So totally in your favour.

nathan1986

Thank you for your advice. I am going to consider keeping hold of my money for the time being and just saving the maximum amount possible and hope for a little luck somewhere down the line.

Thanks

Nathan