Multiple Expat Mortgages

Expats who have built up portfolios of properties for the UK rental market will be fully aware of complexities and frustrations that can be associated with holding multiple mortgages. Where only a few properties are held, obtaining mortgages on them will still be straightforward however when your portfolio reaches higher numbers of properties you may find lenders will limit the number of properties they will finance with one person.

This also leads into the way the properties in your portfolio are held to manage your tax liabilities. This may involve setting up an special property vehicle (SPV) which is a form of limited company that is specifically set up to handle property transactions.

However, as we have shown many times, lenders are are fundamentally concerned with risk and holders of multiple properties will all present different risk profiles to the lender meaning that each case will have to be assessed quite differently. Things that will come into the equation will be the borrowers experience as a landlord or company director, the overall debt held on the portfolio and the borrowing  to rental ration using the lenders criteria for that.


Multiple occupancy buy to let expat mortgages (HMOs)

These are well covered elsewhere on this site but essentially we are referring to properties that have been arranged inside to have separate living areas within a single property. A definition of what constitutes an HMO would be a property where you have at least three unrelated tenants living there forming more than one household who share a toilet, bathroom and kitchen facilities with the other tenants. His type of arrangement is becoming more popular with landlords as these properties tend to produce higher yields than separate BTL properties.

They are often set up where students abound, near universities and colleges where there is always demand from students looking for short term rents who as generally young single people, don’t mind the rather cramped living conditions and sharing facilities with others in a similar situation. The students benefit from only having to rent a room which will be cheaper than renting a one bedroom while the landlord will obtain a higher rent per square foot of space than they would from a single occupancy property.


Main residences and multiple expat mortgages

Property purchased in the UK is subject to UK tax, referred to as stamp duty.  It is calculated through a tiered system and applies to all residential and buy-to-let property purchased in the UK.

In the budget of 2015, the then chancellor of the exchequer George Osborne introduced a series of tax changes which were intended to slow the growth in buy to let property ownership. The aim was to slow the rise in property values and to release property for private residential ownership that would otherwise be snatched up by landlords.

What happened was that where a second or more property was to be purchased then an additional amount of 3 percent was added to each band, including the zero band. This also meant that if you owned a residential property plus a second or more property and you wanted to change your residential property, this extra 3 percent would be applied to your new home.

Getting approved for extra expat mortgages – affordability

Expat landlords building portfolios of property will normally have a mortgage on each of the properties and may regularly remortgage the properties to release cash to pay the deposit on the next property.

How many buy to let expat mortgages would you be allowed? –This will depend on the lender and each will have different rules. Some will only allow you to take out one or two buy to let mortgages while most will allow up to 10. There are others with no limits on the number held.  Sometimes the location of the property can be restrictive. If the property is a flat in a multistory off-plan development for instance, most lenders will have restrictions on the amount of exposure that would take on that property. If they have reached that limit they will not consider your application.

However, generally speaking if you can produce the deposit required by the lender and if the rental income meets the lenders criteria you will probably be able to obtain a mortgage from some lender to purchase the property.

Mortgage affordability – With buy to let (BTL) property purchases lenders are more concerned with the rental income rather than the landlords overall income when deciding to lend and each lender sets there own criteria for this but as a rule of thumb, you will want your rental to total about 150% of the mortgage repayments each month using an arbitrary interest rate of 5.5 percent to calculate the mortgage repayments.

However, where landlords have a large portfolio, the lender may take an overview of the risk of the properties not being rented for a period and may then look to the landlords other income sources to be sure that the landlord wont default on any loans.

With all of the different criteria that lenders apply, it is always sensible to shop around online to see what deals you could get and just because one lender turns you down, it doesn’t mean they all will.

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