UK Mortgages & Moving Abroad

WhataCrock

We received a really strange letter from our mortgage provider in the last couple of weeks. Basically it said it is changing its mortgage conditions as of May 2021 so if we intend to go abroad (or if we are already living outside the UK as at May 2021) we must tell them as - depending on where we are residing/might intend to reside abroad - local laws in the foreign country concerned mean that our mortgage provider may no longer be able to provide us with a mortgage and we might have to repay the balance outstanding.

The mortgage provider sent four sides of A4 answering various questions except the two questions that really interest me - why is this an issue now? And a specific foreign country where a British expat living in that country would be unable to continue to have a UK mortgage on UK property.

I always assumed every mortgage providers included already conditions in their Ts&Cs which say if a mortgagee intends to reside outside the UK then the mortgagee must tell their mortgagor that they intend to do so. It seems my assumption was wrong!

Does anyone know why we have been written to now and why this is suddenly such a big issue? Is this anything to do with Brexit (although I assume if we were to move to a desert island in the Pacific (I wish) that would be a major problem too)?

Also, can anyone give an example of a foreign country where, because of local laws and regulations, it might be impossible for a UK bank or building society to continue to offer a mortgage on a UK property to UK expats?

Incidentally, we have no plans to depart the UK.

Thank you.

davidmcn

I don't know about any change in regulations, though I suppose for standard residential mortgages it's a bit of a moot point because it's generally a condition that you use the property as your main residence - which by definition you'd be breaching anyway by emigrating.

K_S

@whatacrock Afaik, yes, this is due to end of financial services passporting arrangements with the EU. These arrangements had allowed UK banks and building societies to trade freely in EU states. Without these rules, lenders may need to apply for a licence in the relevant country, which probably wouldn't make commercial sense.

The rules are quite vague and it's basically left to the individual lender to ensure that they are complying with the rules (not sure whose rules, EU, UK or both). I expect that there will be more clarity and a more uniform approach by UK banks over the coming months. As of now, it's each lender interpreting their responsibilities in different ways. 

One current example is - since new year 2021, TSB has banned anyone with an overseas address who has a buy-to-let mortgage in the UK from switching to a cheaper deal. So not even a PT. So that's a major change.

I've had one panicked client call me about the same letter, she has a flat on CTL (the lender already has her overseas address in HK) and was worried the lender is going to ask her to redeem the mortgage. I called the lender and struck out, no one I spoke to could tell me anything.

To answer your question, I don't know what the difference would be between (say) an EU country like Spain or some like Tuvalu. As long as you're not planning to leave the UK and retain this property, I guess it shouldn't be an issue.

Thrugelmir

WhataCrock said:

Also, can anyone give an example of a foreign country where, because of local laws and regulations, it might be impossible for a UK bank or building society to continue to offer a mortgage on a UK property to UK expats?

Lloyds Banking Group in the Netherlands. Lloyds have not applied for passporting rights to conduct commercial banking business activity there. 

WhataCrock

Thank you all for your replies.