Buy to Let mortgage if living abroad(17 Posts)
DH and I are looking to buy a flat in the UK as a long term investment that we would rent out. But whenever I ring lenders they won't consider us as we live abroad, even though I am paid in the UK and pay British taxes/NI. Has anyone else been through this? V grateful for any advice.
I have had this problem as am trying to remortgage a flat which I got the initial mortgage on when we still lived in the UK. I was told that HSBC will do non-UK owners buy to let mortgages - no idea if this is true as haven't called them yet but let me know if it works!
We have one with RBS - you could try them. The key issues were % of deposit, whether we were renting versus leaving it empty and then of course you don't get offered the best deals in terms of interest.
Some banks are pretty thick. If you are paying UK national insurance on income earned abroad but where that money is paid by a UK employer and it is also taxed by the UK, it is a pretty good signal that you are still considered as a UK resident!!! My husband is in exactly that situation, he was told by his bank that he no longer qualified for an ISA, but he does indeed qualify for an ISA, HM Revenue and Customs treat him as if he is physically in the UK, so therefore all banks should treat him the same - I would refer any mortgage providers that refuse you a mortgage simply that you are not currently in the UK to HM Revenue and Customs - if you are obliged to pay UK tax AND crucially UK national insurance on a UK salary, you ARE still a UK resident. Very few people are in this situation, I can think of UK crown servants and UK Armed Forces personnel posted outside the UK as being the 2 main categories of people who are in this situation.
I would however be a bit cautious about going for a mortgage immediately as a "buy to let" as you will be charged less favourable interest rates. Plus you might actually not make enough profit on the rent to cover the cost of the mortgage and maintenance costs. We have a mortgage on our UK property still and the income from the rent would in no way cover the cost of a 90% mortgage on that property, even though we are charged an interest rate as if we are living there and we only get that interest rate because it used to be our family home, otherwise we would be paying 2-3% higher on a buy to let interest rate. You do also have to consider Capital Gains Tax if you ever end up selling. The UK tax regime on rented property is not great - out of £600 rent we receive on our UK house each month, we end up with maybe half that amount after we have paid maintenance costs and tax, so we make less than £4000 a year on a house which has a value of around £225,000, it's a very low rate of return, if we had that amount of money in the bank, we could instead be making over £8000 in interest!!!! Yes maybe it's time to think about trying to sell our house again.
We got a buy-to-let mortgage while living overseas with HSBC but this was about 5 years ago so I'm not sure if they are still doing them.
We don't cover our mortgage with the rent but we knew that would be the case when we bought the flat. It's a long term investment, which our tenants pay part of the cost of, as far as we're concerned.
What natation says, apart from the tax - the tax we pay on ours seems to be pretty minimal, once you take off wear and tear and agents' costs, mortgage interest, repairs etc etc. Last year I paid around 800 quid in tax, and ours rents out for just under 2K a month. DH's bill was less. Are you sure yours is being calculated properly, natation?
My understanding is that you have to go through a broker - no idea how to get hold of one of those Im afraid.
We tried to get a Buy to Let when we were in the UK for our move abroad from Halifax. Once they found out we would not be resident in the UK they refused the mortgage on pretty sprurious grounds.
Mrschadenfreude, yes unfortunately we don't have much of a mortgage so hardly anything to offset there (well fortunate we don't have much of a mortgage though), repairs were offset, as were agent's charges, hubby is UK tax payer and his salary is in 20% bracket, the profit on house goes just into 40% bracket, once you add on the maintenance costs, small mortgage, we are left with a little over half original rent, could be worse cos we could have a huge mortgage on the house and therefore could be making absolutely nothing on the house at all, many people in our situation with 90% mortgages end up with rent which does not even cover the mortgage, so I count ourselves lucky. We'll make more next year as I made £0 in the UK this year so will pay £0 tax on my half of profit. Also hubby has been bullied into taking a pay cut for exactly the same job, so next year his profit should fall at least in part in the 20% tax band. At least I think we get an exemption for Capital Gains as a crown servant posted abroad, if we don't then we are stuffed there too.
Blimey, I hadn't even thought about an exemption for capital gains tax. Just assumed we were...
Not sure what a small mortgage is these days, as most of my friends seem to have debts that would make me unable to sleep at night! I think ours is relatively small...
I've never heard about an exemption for capital gains tax for Crown Servants overseas. Is it new? I sold a flat in the UK 3 years ago while overseas and did pay CGT, although with PPR relief as it has once been my main home, and lettings relief as it had been rented out. Do any of you have any more details about the exemption? Does it make any difference if the property has been rented out while you've been abroad? Thanks for pointing me in the right direction: I can't find anything on Google.
We remortgaged a couple of years ago. We used a mortgage broker BPE Homemove and they were great. We were living overseas and although I had lived in the property for a few years it had been rented out for a number of years. They were able to find us a mortgage with Cheltenham & Gloucester whereby we didn't have to change it to a buy-to-let. As we only have one property so it is treated like our primary residence and therefore we don't have a buy-to-let mortgage which would be much more expensive. We searched ourselves for a suitable mortgage and couldn't find one. I would recommend using a mortgage broker as they can advise you.
We bought a property in 2007 when we thought we were going to be posted home, and got a buy-to-let mortgage with Clydesdale through Moneyextra.com We are still abroad!
I can highly recommend Moneyextra -we've used them 3 times now for mortgages and they do all the legwork for you, give you full illustrations of what it will cost, what monthly repayments will be etc. Living abroad obviously limits your choices but there are still deals available.
Re Capital Gains Tax on houses - it\s my understanding that if you buy a property while outside the UK, and sell it again before returning to the UK then you don't pay CGT. The way the housing market's going, I don't think we've made much on it anyway ;(
I think you have to be non resident for 5 tax years then you are exempt from capital gains. Definitely try a broker as they will quickly know which lenders are providing the best rates and terms for expats at the moment.
Some banks don't like to lend to people living abroad as the risk of not being able to get hold of you if you stop paying the mortgage is much greater, rather than anything to do with you paying tax or not.
If you get something in London your yield is likely to be greater than outside. For example if you paid about £200k for a flat in se London you should get a rent of at least £1000pcm. The capital growth should be higher too.
we remortgaged our uk homw whilst living in spain last year. Dh works for spanish company. just googled expat mortgages and loads of brokers came up. our mortgage through halifax in the end. simples.
Hi there. Thanks for all the gr8 advice. Went through a broker and they've found a mortgage with Lloyds TSB which is for expats (sounds similar to yours ginwillfixit). It's not buy to let but you're allowed to let it out while you are abroad. Much better rate than buy to let. Hurrah!!
Hi please could you provide details of your broker, i'm in a similar situation.
hi mprior84. The mortgage was with Lloyds TSB but a friend tried to get the same deal a few months back and the product has been pulled. She wasn't offered anything even remotely competitive so I wouldn't recommend the broker anymore.
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