Expat Morgage: How much deposit and when to seek broker?

heather90

I have relocated to Switzerland in the last few months and I have found myself in the lucky position of being able to save substantially more than when I lived in the UK.

I would like to purchase a home in the UK as a buy-to-let in the near-ish future. I understand that I will need a specialist broker and a larger deposit that if I were a UK resident but I have no idea where to start. The property I would be looking to buy would be in the region of £100-150k.

Can anyone help with the following?
-At what stage do I contact a broker? Should I do this now, or wait until I am ready to apply for mortgages?
-Does anyone have a ballpark figure of what deposit would be required? I understand this is dependent on many factors but am I talking 10%, 25%, 50%?

Other information which may be relevant
- Plan to remain outside of UK for at least 2-3 years, most likely 5+
- Current compulsory outgoings (rent & bills) are just under 30% of my net income, able to save 40%+ of net salary each month whilst still accounting for a good quality of life and emergencies
- Single, 29 years old, no dependents
- A co-signee/ guarantor is not a viable option as my parents still have a mortgage
- I have a permanent job contract from a multi-national company paid in swiss francs
- I have had finance in the past, a car and credit cards and have a "good" credit rating currently

csgohan4

BTL is no longer the cash cow it used to be, have you consider the legal and tax implications of this?

If you let an agent to manage for you, expect fees and your still responsible if any thing goes wrong. Eviction costs, void costs, have you costed everything?

heather90

I would not really be looking to use this as a "cash cow". This would be a long term investment with the hopes of the value of the property increasing over time. My parents are able to manage the property for me and I would only rent out to a person known to my family or close friends. I also have access to almost free legal advice to check contracts etc. Essentially, whilst still there, the risks would be mitigated as much as is possible for any landlord

The long term plan is to return to live in the property at some point, or sell and buy another property in the local area when I return, gradually increasing my assets over time. Unfortunately I am completely priced out of the swiss residential market and so UK is my only way to invest in property.

There will be some tax implications, something I am aware of and I am in the process of investigating further. However, a modest payrise in Switzerland would increase my taxable income more than the rental income would.

Mortgage_Adviser

There are a couple of lenders that would consider 20% deposit. To have an access to a reasonable pool of lenders you need to have at least 25% deposit.
No options whatsoever with 10% deposit.
You may want to identify potential property type/value before contacting the broker.
For example there will be significantly more options if you wanted to buy a property for 500k in London as opposed to buying in Scotland for 60k.

Thrugelmir

heather90 wrote: »

I would only rent out to a person known to my family or close friends.

Never a good idea to mix business with close acquaintances. Doesn't guarantee a better tenant. Often clouds the initial judgement too.

heather90

Thrugelmir wrote: »

Never a good idea to mix business with close acquaintances. Doesn't guarantee a better tenant. Often clouds the initial judgement too.

It's a small town, renting to somebody I or my close family don't know would be a challenge! But of course all of this would be completed through correct legal channels and with costs fully calculated before purchase. Another benefit of purchasing in my parents local area is access to a network of family and friends with trades which will reduce maintenance costs. Also a dad who will fix most smaller issues in exchange for a crate of beer or the cost of a lunch out

This is more of a planning forward exercise than an immediate knee jerk purchase.

heather90

Mortgage_Adviser wrote: »

There are a couple of lenders that would consider 20% deposit. To have an access to a reasonable pool of lenders you need to have at least 25% deposit.
No options whatsoever with 10% deposit.
You may want to identify potential property type/value before contacting the broker.
For example there will be significantly more options if you wanted to buy a property for 500k in London as opposed to buying in Scotland for 60k.

Thank you for the response. 25% is achievable with some careful planning

I'm really trying to plan forwards, rather than being in a rush to invest immediately. The property would be in a commuter town in northern England. The rental market is strong but in case of the property being empty this would not place a huge financial burden on me to cover costs for a few months.

The lowest priced suitable properties are around £85-90k property with £500pcm rental potential. The deposit would take me around 6 months to save. Ideally though I'd be looking at a £130-150k value with £700pcm rental income which would take me 12 months to save the deposit. It's just a case of balancing the two.

haras_nosirrah

are you a first time buyer or have you owned before?

I have just done a mortgage for an expat first time buyer buy to let - the pool of lenders is small

heather90

haras_nosirrah wrote: »

are you a first time buyer or have you owned before?

I have just done a mortgage for an expat first time buyer buy to let - the pool of lenders is small

Yes, first time buyer and I have literally no idea where to start, other than the fact I'll need a lot more than 10% deposit and I can't access a help to buy ISA. Would you agree the 25% deposit is achievable, on a house in the region of £130k? Or would I only be likely to find a lender at 25% deposit on London price homes?

It wouldn't take me too much longer to save a higher percentage but in the area I'm looking a house over £150k would not make much sense as a rental property. Rents in the area top out at around £850. In that case I would be better in that case keeping savings in Switzerland until I move back in that case.

haras_nosirrah

there are potentially 4 lenders who will consider ftb expat btl applications but the devil is in the detail and you aren't looking at high street rates.