The chances are high for needing a large mortgage or refinancing after you have relocated offshore. This need may not have come across your mind until the last minute, while the facility requires replacing. UK expats based abroad would need to refinance or opt for a lower rate to obtain the best from their mortgage and save money.
UK expats based in offshore locations become a bit more ambitious when the new friend circle that they interact with is engaged in building property portfolios. At this point in time, they realize that they need to begin releasing equity from existing properties to expand their property portfolio.
In the past, there were a few banks that offered mortgages for clients who were based almost in any country and needed to buy property. However, since the banking crash in 2007 and the UK taxpayer takeover of some banks in the UK, obtaining large mortgages for UK expats have become increasingly rare with the expat community struggling and finding it difficult to replace their current facility. This is regardless of whether the refinancing is needed for releasing equity or for lowering their existing rate.
Since the catastrophic UK and European demise in the property, employment, and major financial sectors, there are some Asian banks that are well capitalised and replete with resources to take over from where Western banks to emerge as predominant players because the latter have largely pulled out from the mortgage market.
These Asian banks have for an extremely long time had necessary stops and regulations in place to put an end to major events that could affect their property markets through the introduction of controls at certain points in order to slow down the growth that has effectively spread from large and major cities such as Shanghai and Beijing as well as other property hubs such as Kuala Lumpur and Singapore.
Mortgage brokers based abroad specialise in sourcing large mortgages for UK expats, who are based abroad but who still hold property in the UK. Asian lenders will enter the mortgage market offering a tranche of funds on the basis of a specific set of criteria that may not be too rigid, to attract as many UK expatriates as possible. Post utilisation of this tranche of funds, they may sit out for some time or issue fresh funding to the potential clients but with extra selection criteria. It is quite possible for a lender to offer nearly 75 percent to London’s Zones 1 and 2 on the first tranche. Then, on the second tranche, they offer 75 percent lending to exclusive postcodes in Tube Zones 1 and 2 or carry out a reduction in maximum lending to 60 percent.
These lenders are definitely favouring the constantly growing property giant in the UK, especially London. With steady growth in some regions of the UK in the last one year touching 8.6%, Asian lenders are releasing funds to the existing property market in the UK.
Interest-only mortgages for offshore clients are largely a thing of the past. Due to perceived risks, should there emerge a scenario for market correct in the London and UK markets, lenders are refusing to take chances, and a majority of them generally offer only Principal and Interest mortgages or Repayment mortgages.
The thing to keep in mind is that this criteria will continue to evolve as they undergo adjustments towards the banks’ perceived risk parameters, which change on a monthly basis if clients have failed to make their mortgage payments or have completely defaulted on their mortgage repayment.
This is where possessing knowledge with regard to the happenings in such a stiff market can translate in obtaining a mortgage or being refused one.