Ex-pat mortgages were back in the news recently when challenger bank, Aldermore, launched a new buy-to-let product for people living overseas.
Now’s not the time to drill down into the detail but it’s a loan available to both self-employed and non-multinational employees, working in a much wider range of countries, including Australia.
In short, it’s the latest example of a bank introducing greater flexibility into a sector that has traditionally been an afterthought among lenders.
It’s also symbolic of the growing momentum we’re seeing in ex-pat buy-to-let, and a reason why brokers should take note.
A growing market
It’s hard to nail down an exact figure but there are estimated to be circa 5m Brits living and/or working abroad at present. So ex-pat buy-to-let is not exactly a small market to tap into.
You’d expect that number to rise, too, given how remote working is becoming more common due to new technologies and evolving workplace cultures.
And with many ex-pats wary of being left behind by UK house price growth, it’s no surprise this is a growth sector.
While there is still room for improvement, rates have come down and criteria are becoming less stringent as more lenders, like Aldermore, enter the market with new products.
It’s worth noting that LTVs generally won’t go higher than 75% and that rates will often be influenced by the currency an ex-pat is getting paid in. Underwriting as a whole will also be deeper as lenders seek to build a picture of the borrower’s overall financial position.
With this in mind, expect the application process to last up to three months. Also expect lenders to vary in the countries they will consider — some countries are relatively straightforward, others less so.
Money and oil
Brokers that are focused on, or exposed to, specific industry sectors will likely come across ex-pat buy-to-let applications more than others.
Here in Scotland, for example, a classic ex-pat buy-to-let client is an oil or gas rig worker, which often involves working abroad for long periods of time.
Financial services is another sector with a relatively high number of ex-pats, and this number could rise if, following Brexit, other countries in mainland Europe – notably France and Germany – seek to draw the best of the city away.
For the vast majority of brokers, it goes without saying that ex-pat buy-to-let will only ever be a satellite element alongside their core offering but it’s still one worth having.
After all, it’s another string to a broker’s bow in terms of their broader proposition and an additional revenue generator, typically paying out a proc fee of between 0.8% and 1%. It simply doesn’t make sense to ignore it.
Mark Dyason is managing director of Thistle Finance