A to Z of Expatriate Mortgages
When International Mortgage Plans (IMP) established their advisory service in
Hong Kong twenty nine years ago, the market was dominated by a handful of
international banks offering decidedly lacklustre terms to a captive market.
Loans were often conditional on a banking relationship and the borrower’s
willingness to submit to mediocre terms, and equally mediocre conditional
in-house insurance deals.
IMP broke that mould by introducing expatriates to mutual building societies
and persuading the reluctant mutuals that expats offered high quality lending
without risk. Whilst Town & Country, St Pancras and Britannia’s flirtation with
the market were short lived, Portman Building Society in taking over the St
Pancras were to offer market leading products, exclusively via IMP for over 10
years. Regrettably they too are history following their Nationwide merger to
whom expat lending is anathema. Recently several UK building societies have
decided that lending to expatriates might be a good idea provided they can make
extra profit from them. Hence the ‘new boys on the block’, the Bath, Kent
Reliance, National Counties, now known as Family Building Society and Saffron
Building Societies have dipped their toes in the water with pretty mediocre
terms expecting to charge expatriates arrangement fees of 2-2½%. They are
pricing for greed, and little wonder that so far, their products have been
largely ignored by expatriates familiar with the more reliable established
So, who are the main players in this market place and what of their strengths
and weaknesses. Here is an A-Z which whilst not exhaustive gives a good overview
of the market.
A. Abbey – aka Santander
Still unkindly but deservedly referred to as "The Shabby". Now under the
parentage of Spanish bank Santander. Once Abbey were bold enough to open offices
aimed at expats in Hong Kong and Dubai but these were closed during one of their
frequent reorganisations. They are of little help to expat borrowers and are
particularly obstructive to existing borrowers looking to extend their terms, or
……. and Australia!!
Not a lender, but there are problems with obtaining facilities for British
expatriates resident in Australia. This is as a result of the Australian
Corporate Governance Act which initiated particularly vicious banking regulatory
restrictions which have put a stop to our mainstream lenders, Lloyds (now
withdrawn from expatriate lending), Nat West/RBS, Bank of Scotland etc.
advancing funds to British expatriates living in Australia for UK property
financing. Attempts to find an explanation for this Australian protectionism
have failed. Fortunately, the directive does not extend to all building
societies, and hence our limited facilities for building society lending are not
B. B M Solutions
Part of Lloyds Group and expatriate terms withdrawn 9/11/12.
Buy to Let
Expatriates have purchased investment property to keep a foothold in the Uk
and as part of pension planning. New rules now in force mean enquirers and
clients should seek professional advice on their UK tax situation.
In June 2016 the British people voted to leave the European Union.
The subsequent reduction in sterling against the US dollar has made
purchasing property in the UK cheaper for many expats. However, this has been
offset to some extent by the impending tax changes and the uncertainty as to
what terms will be applied to the UK on leaving Europe.
C. Cheltenham & Gloucester
As a building society they were helpful to expatriates although their service
standards were abysmal. Since acquisition by Lloyds/TSB they have not shown any
interest in expatriate lending. Nowadays they do not accept applications from
D. Derbyshire Building Society
Made a brief foray into expat lending and deposit taking. Involvement with
the Icelandic banks enforced a run for cover under Nationwide’s ample umbrella.
………Dudley Building Society
Will consider expatriates up to 60% loan to value. Must own property in the
E. Exhibitions – Property
Currently the London property market is being inflated with the influx of
investment purchasers from the Far East, Gulf and Russia. In 2013 72% of all
London new property sales went to overseas property investors, many of whom will
be hoping to ‘flip’ their contracts before completion date. This was the problem
with the Docklands ‘developments’ in the late ‘80’s. History may well repeat
There are reports that Britain’s biggest housing development, Nine Elms in
London, is seeing a rave of ‘flat flipping’ as investors try to sell unbuilt
properties amid fears the Capital faces a glut of expensive homes. Nearly 20,000
units are under construction at Nine Elms on the South Bank of the Thames facing
Chelsea. You have been warned! For those that want an up to date view on what is
happening in the London property market we can thoroughly recommend the website
F. Fortis BNP Paribas
Their offices, in London and Hong Kong, offered a second-to-none service to
expatriates and foreign nationals for many years. Their rates were slightly
better than many of their bank competitors and they were extremely helpful when
borrowing was required via special purchase vehicles, off-shore trusts and
companies. They were very competitive for multi-currency loans. After a brief
return to the market place under the new BNP Paribas ownership this lender has
withdrawn from the expat market place entirely.
Has made an unwelcome return to the property market. Unscrupulous estate
agents and greedy vendors have been taking advantage of strong demand and
reneging on agreed sales
Also part of the Lloyds Grouping. There seems to be some sort of movement
towards helping expatriates where the loans are residential, but this is on a
very discretionary basis. Complaints from applicants and personal experience
indicate that the Halifax are now exhibiting all the worst aspects of their
Lloyds parentage. Applicants applying for a £500K mortgage on £1m. plus
properties are being asked to give details of their expenditure on Sky,
groceries etc. – crass stupidity! May consider expatriates for residential
mortgages where all salary is paid in sterling. A rare occurrence.
……. Heritable Bank
Unfortunately, another victim of the Icelandic bank failures – part of
Landsbanki. This is a shame - rather like Fortis they were a true "niche
lender", with first rate service, sensible underwriting and personnel who
actually knew what they were doing. Whilst not having the sharpest rates in
town, they were not far off the pace and there was plenty of add-on value to be
had with this lender.
Existing borrowers are often offered ‘discounts’ to move their accounts. This
is an area IMP can advise on.
……. Holiday Lets
Whilst the purchase of a property for holiday lets has many positive aspects,
unfortunately that view is not shared by our myopic lenders. We have access to
one lender who will consider these. Maximum loan to value is 70% and 65% for
flats and apartments outside the London area.
…….. Holmesdale Building Society
Another newcomer to expat lending via a limited panel of introducers which
includes IMP. They offer terms for expat buy to let and expat residential, and
are competitive in both areas of lending. Currently withdrawn from the sector
but may return at a later date.
…….. Homes of Multiple Occupation (HMOs)
These too are shunned by expatriate lenders and indeed by 95% of UK lender
where UK residents are concerned. IMP has access to a lender with a maximum loan
to value of 50%. Applicants must currently own property in the UK. Ex local
authority flats and flats over commercial premises also considered unacceptable
Considering their high profile as "the world’s local bank" HSBC are
remarkably feeble in helping customers with UK financing or refinancing. Whilst
rates are competitive the bank seems so intent on selling every other service
they have to offer that mortgage help takes a back seat. All sorts of
restrictions impede the intending borrower and tales abound of initial agreement
being subsequently reneged on. Mortgages only available to HSBC Premier
customers and lending policy changes with the phases of the moon.
I. Ipswich Building Society
An old established UK building society and the only one making loans of any
significance to British expatriates overseas. Now in their tenth year of
expatriate lending via an exclusive IMP deal. Rates, terms and service are
consistently ‘best buys’. This probably reflects Ipswich’s mutuality existing as
they do for the benefit of their members. At the present time, Ipswich have
temporarily withdrawn from residential lending due to the Mortgage Credit
Directive on currency earnings. Currently offering buy to let lending to
expatriates on purchases and remortgages to 75% loan to value. Funds are limited
to monthly allocations. It is hoped that Ipswich will return to the residential
expatriate sector when the impact of the new directive has been assimilated and
new monitoring systems put in place.
J. Joint Mortgage
The majority of our lending partners will accept an application for a
mortgage in joint names although one partner may not be earning.
K. Kent Reliance Building Society
This Society is now owned by J C Flowers the international conglomerate, and
it is unlikely that we will see much mutual building society paternalism from
this lender. Applicants must already own a UK property and facilities will be
restricted to London and the South East. An eye watering 2% arrangement fee will
be required, and apart from the ability to lend on new builds which are shunned
by some other lenders, we don’t see a great deal of future in using this
….Know your customer.
Applicants, lenders and mortgage brokers are burdened under the weight of
money laundering regulations. Fully completed forms, the correct certified
(where required) supporting documents make for less stressful and efficient
Lloyds once had the expatriate mortgage market by the throat and were by far
the largest supplier of funds. They were particularly strong in the Far East
where their Hong Kong and Singapore offices were very aggressive in their
In withdrawing from expatriate lending, they have created a very large gap in
the amount of funding available. Hence other lenders are under more pressure
than they feel comfortable with. It now seems obvious that Lloyds were far too
generous in their terms and this has been reflected in the impact made on the
profitability of their ‘lending book’.
M. Mortgage Brokers
They should be able to access the entire, albeit limited, expatriate
marketplace. They will almost certainly be remunerated by the lender, via a
procuration fee and this could determine the arrangement fee they will usually
charge. This could be anywhere between £500 and 1% of the loan but a good broker
should be able to save an applicant serious money. By handling the processing of
the loan proposal they can help avoid much of the heartache in dealing with
lenders who seem intent on employing sales prevention forces.
……. Mortgage Credit Directive.
New regulations effective March 2016 require lenders to install expensive
monitoring systems for residential mortgages, where borrowers are paid in a
foreign currency. Many lenders have decided to withdraw from this area of
N. Nationwide Building Society
Nationwide are the UK’s largest building society by far - an unhealthy six
times the size of their nearest competitor. They behave like the worst of the
banks and are absolutely no help at all with expatriates wanting to raise money
for property finance, although they are extremely happy to accept expatriates
offshore deposits. In taking over the borrowers of the Portman and Lambeth
Building Societies they took on the loan books of societies that had actually
been helpful to expatriates - in Portman’s case for many years. Whilst they have
said that they will stand by commitments to those societies existing borrowers
(as they should and must) they refuse to allow any further borrowing for them
and will not assist with changes of property if the new property is to be let.
They have recently sought increases in interest rate from original Portman
borrowers they acquired. This has been successfully contested and their demands
……….. Nat West Offshore – aka Royal Bank of Scotland
RBS were a major victim of the banking crisis but they continue to offer
competitive terms to expatriates. Whilst their proposed major hub in Dubai did
not materialize, and their Singapore operation been curtailed, thankfully their
Guernsey office provides an excellent service. In shades of ‘dropping the dead
donkey’, RBS have now rebranded as Nat West Offshore
Loans are available on a capital repayment basis to 75% of valuation for
properties valued at less than £1 million. Loans of 70% are available interest
only at a rate .5% lower than larger loans. This lender is particularly generous
when it comes to follow-on products for borrowers coming out of their initial
deals. Currently they offer a 4% standard variable rate with no early redemption
NatWest International Isle of Man will consider residential lending to
expatriates but are restricted depending on the applicants’ country of
Lenders who consider expatriates may be located on the UK
mainland, the Channel Islands or Isle of Man. Each office will take a different
approach to expatriates.
P. Portman Building Society
Portman were probably the most competitive provider of expatriate mortgage
funds via exclusive IMP arrangements for over 10 years. Whilst the relationship
wasn’t perfect it was better than most. Regrettably Portman borrowers now have
to suffer the indignities of dealing with the Nationwide. At least the many
hundreds, who by default came out of their Portman discounts and fixes, are
enjoying the benefits of Nationwide’s tracker rates which must be causing them
considerable pain – 1.75% - 2.5% are common deals in place with no end date, and
with the ability to carry on letting. However, no additional funding will be
provided and neither will a change of property if letting is to continue.
Nationwide were seeking to increase rates by 1½% where borrowers had let for
over 3 years. They have had to retreat from this as a result of IMP and ex
Portman borrowers pointing out that they should not be disadvantaged by the
Q. Qualified Accounts
Not many expatriate lenders accept the self employed. Those that do
invariably require accounts to be prepared by a UK qualified accountant. IMP can
provide a list on request.
R. Regional Building Societies.
With limited resources to compete with the large lenders they seek niche
markets to operate in. Thankfully the expatriate sector is one of them.
New rules implemented by the regulators have had an impact on borrowing
capacity for buy to let mortgages. A general rule is that for every £1000.00
borrowed, rental has to be assessed at £6.64 per month.
A couple of the regional building societies will accept applications from
repatriates without long periods of qualifying residency in the UK
Unfortunately, expatriates wishing to purchase or refinance property in
Scotland have a particularly difficult time. Odd bearing in mind the huge
numbers of Scots who inhabit all expatriate centres. Some lenders are unwilling
or unable to cope with the difficulties presented by the differing Scottish
legal and purchasing systems – daft! What an opportunity for a lender – we
continue to seek one!
....... Saffron Building Society
Saffron were active in the expatriate market place via IMP pre the 2008
crisis. Whilst their return to the market place is most welcome, they too seem
to see expatriate lending as a way of boosting profits via an arrangement fee of
2.5%. They say they have no early redemption charges – perhaps they don’t, they
just take it up front! An unattractive standard variable rate of 5.39% will not
see expats rushing to access their terms.
……. Skipton International
Skipton International are a welcome addition to the increasingly meagre
supply of expatriate mortgage funding. They are very competitive on interest
rate, and unusually offer a variety of fixed rate deals. However, they prescribe
the residents of no less than 97 countries, require a declaration that the
borrower will never live in the subject property and their stress testing for
affordability is fierce. Loans are subject to the law of Guernsey. A notional 6%
interest rate used in the buy to let calculator can make the desired level of
lending difficult to achieve.
……. Stroud & Swindon Building Society
Britain’s 13th largest building society spent two years building up a £20m.
expatriate book via exclusive deals through IMP. Their rates were ‘best buys’
with a 2.3% three year discount from their standard UK buy to let terms.
Obviously, they found servicing expatriates too difficult, as lending terms have
been withdrawn, and they are now watching their £20m. book walk away as the
exclusive deal had no early repayment penalties. IMP have special remortgage
arrangements in place, some with free or discounted valuation and legal fee
offers. Stroud & Swindon have recently been taken over by the Coventry Building
Society who have shown little help in assisting the expatriate borrowers they
have taken on board. Disappointing!
T. The Mortgage Works
Previously a subsidiary of Portman B S, now Nationwide. Their propositions
were focused on buy to let lending, including loans for expats. Whilst their
rates were not the keenest, they did have a whole range of products and at one
time were able to provide an excellent service. They no longer lend to
expatriates and are particularly unhelpful with existing expatriate borrowers in
line with Nationwide’s stance.
The previous Chancellor George Osborne in successive budgets has implemented
changes in the tax treatment of buy to let investors which will be phased in
gradually until 2020. Buy to let investors are advised to seek expert advice in
this sector so that they are not landed with unexpected tax bills. W T Fry have
always looked after expatriates
Key to the application process. Fully completed and packaged applications are
the best way of seeking a quick and efficient mortgage offer
V. Variable Rate
Expatriates lead busy nomadic life styles. They should always ensure that
when the initial product matures they are not disadvantaged by being placed on a
standard variable rate.
The expatriate homeowner buyer and borrower are newly empowered! They no
longer have to rely on the sales pitch of the far away agent or developer and
can consult specific websites, which will tell them the comparable sale prices
of properties adjacent to that of their interest and environmental information,
including the likelihood of flooding in the area of their interest.
mortgages there is no need to look further than Google, using the key words,
expat mortgages, expatriate mortgages and expat buy to let.
new and very comprehensive property price comparison site.
will let you know the sale prices property has achieved in the road that you are
looking at. These prices are the actual figure paid as registered by the UK land
a UK postcode the site will tell you about any environmental/pollution/flooding
and subsidence risks to the property.
a useful agent’s site to see what property is on the market.
Financial Conduct Authority no nonsense guide to mortgages site.
X. X-Rated Lending Policy
The proliferation of confusing, bewildering and conflicting policy that
different lenders apply when accepting expatriate business. For example, one
lender will accept residents of Australia but not an application where parents
will occupy. The next lender will lend where parents occupy but not lend to
residents of Australia. Policies have often been in force for many years and the
lenders show a great unwillingness to adapt and meet changing needs.
The return on investment... Important when expatriates are searching for
investment property. Factors to take into account the, possible rental voids,
taxation and general upkeep and maintenance.
A tool used by many offshore lenders when considering applications for
property in the London area. Many use the Transport for London zone areas in
deciding where to lend. For example, restricting lending to zones 1-4 and not
In summary expatriate borrowers are treated as second class citizens who may
as well be from Mars as Dubai or Hong Kong. It’s a frustrating business dealing
with UK financial institutions from the UK – from overseas it’s a nightmare.
Most lenders flimsy defence to inability to lend to expatriates or the need
to impose unfavourable terms rests on their unwillingness to pursue debt
overseas. This totally ignores the fact that loans are only offered to a lower
percentage than in the UK, and in the unlikely event of repossession the lender
would probably take over an income producing asset. IMP has demonstrated for
many years that the persistency of expatriate loan books is superior to that of
The main banking groups, Barclays, HSBC, Lloyds (now withdrawn from
expatriate lending) Nat West/RBS and Santander, account for over two thirds of
lending in the UK. An unhealthy situation. Unsurprisingly this grouping also
accounts for more than 90% of customer complaints! More competition amongst
lenders is required which in turn could open up the expatriate market.
A further factor is that lenders’ underwriting procedures are now so geared
to box ticking that dealing with expatriates with more complicated lifestyles
than UK residents is just beyond the competence of most UK lenders. Looking back
at the lending conditions prevalent twenty years ago there has been absolutely
zero progress in this field of lending operations – pathetic really, and what an
opportunity for a lender with foresight seeking to build a risk free, high
quality loan book.
International Mortgage Plans