Are Overseas Buyers finding it Tougher to Get a Mortgage?
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Are Overseas Buyers finding it Tougher to Get a Mortgage?

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Carl Shave Carl Shave | March 17, 2017

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According to a UK mortgage lender, overseas buyers and British expats are finding it increasingly difficult to buy property in the UK from abroad. Without seeking specialist advice first, it seems the introduction of tougher lending requirements for buy-to-let borrowers is leading to more mortgage refusals for overseas investors than in previous years.

The Importance of Foreign Buyers

Foreign nationals and overseas buyers from areas like Asia, the Middle East, Europe and the U.S. have long been an important factor in the health of the UK property market. This has increasingly been the case since the UK’s decision to leave the EU. The uncertainty Brexit caused, along with the introduction of the stamp duty surcharge on second homes, led to a reduction in the number of British-based buyers. However, the weakening of the pound has made British property more attractive to foreign investors, and this has helped to prop up the market.

Why are Foreign National Mortgages More Difficult to Find?

To a certain extent, British expats and foreign buyers have always been considered a higher risk than domestic buyers, even though many tend to have a high salary and significant assets. However, very few have had trouble securing a mortgage, until now. In addition to the extra risk they pose, recent changes to buy-to-let mortgage affordability criteria have made life more difficult for overseas investors. Now, many lenders ask that borrowers receive a minimum of 145% of their mortgage costs in rental income, up from 125 percent. This has made finding a mortgage more difficult.

The Importance of Seeking Specialist Advice

This change to the lending criteria could potentially have a significant impact on the UK’s property market if foreign buyers are not made aware of the importance of seeking specialist advice before they apply for a mortgage. Despite the trouble some investors are experiencing, the truth is that there are still potential mortgage products out there, but many can only be found away from the mainstream lenders. That is why mortgage brokers are perfectly placed to provide the specialist advice borrowers need. At Just Mortgage Brokers, we have well-established relationships with the UK’s mortgage lenders and know where to turn to find the right mortgage to meet the particular requirements of foreign nationals and overseas buy-to-let landlords. To discuss your circumstances, please get in touch with our team today.

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