EDIT 2017. This has been superseded by a more recent article
No matter what is happening in the rest of the world, interest in the UK housing market remains strong with many people looking to buy a property as part of their portfolio of investments, or as a future home.
Changes to the way in which UK mortgages are underwritten, which came into effect in April 2014 under the guidance of the Financial Conduct Authority, have made it harder to anyone to obtain a mortgage and the options are even more limited for expats.
The changes were largely related to affordability checks and stress-testing. In the past lenders looked at income and major commitments such as loans but now ask many more questions about expenditure. This could include what you spend at the hairdresser, on gym membership, or on your pets. Stress-testing is about seeing how you would be affected in the event of an interest rate rise and ensuring that you have some leeway in your expenditure.
For any expat, the maximum loan to value for a UK mortgage is 75% of the purchase price or value, whichever is lower. Lenders only want to consider mortgages of £100,000 or over and many also require a minimum purchase price of £150,000 so this reduces the options in certain parts of the country.
There are only a limited number of lenders in this market, each with differing criteria and fees, and the interest rate options change regularly. As well as standard variable rates there are usually options for trackers and fixed rates.
Arranging a mortgage from a distance can be a headache when you consider the documentation required and also very time-consuming to research the options, not all of which are directly available. Using a broker not only saves you time and hassle but also gives you access to the best possible interest rates.
It is also worth noting that the finance policy committee of the Bank of England has recently expressed concerns about the UK buy to let market and has suggested that lenders should further tighten their criteria. They have the power to impose this and any changes will make it even harder to expats to arrange mortgages themselves.
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