A to Z of Expatriate Mortgages
When International Mortgage Plans (IMP) established their
advisory service in Hong Kong twenty eight 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, 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 lending sources.
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 borrowing levels.
……. 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Lloyds (now withdrawn from expatriate lending), Nat West/RBS, Bank of Scotland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 building societies,
and hence our limited facilities for building society lending are not impaired.
B. B M Solutions
Part of Lloyds Group and expatriate terms withdrawn 9/11/12.
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 intermediaries.
D. Danske Bank
Offer loans to Northern Ireland property, but it is on a
direct basis only. They do not use intermediaries.
...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
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
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!
……. 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.
They will only lend on the basis of family occupation or letting under standard
tenancy agreements. Standard tenancies have to be for at least for six months
…….. Holmesdale Building Society
Holmesdale that with effect from 6th August they have stopped
taking buy to let mortgage applications – they remain in the market for
…….. Homes of Multiple Occupation (HMOs)
These too are shunned by expatriate lenders and indeed by 95%
of UK lender where UK residents are concerned.
Considering their high profile as "the worlds 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 holding £75,000 in accounts with the bank, and their criteria
gets ‘tougher’ by the day!
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
eighth year of expatriate lending via an exclusive IMP deal. They are
particularly competitive for family occupation lending to expats. This can
embrace many situations – parents occupying, wife/children whilst husband stays
overseas, children studying at university and siblings needing assistance.
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 offering
buy to let lending to expatriates, but will offer remortgages to 75% of property
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 lender’s terms.
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
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.
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
Nationwide’s antipathy to expatriates increased last year
with the announcement that they will not consider mortgages for applicants who
have not been UK resident for at least 3 years!
……….. Nat West International – 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 International who
are part of the same group.
Loans are available on a capital repayment basis to 75% of
valuation for properties valued at less than £500K. Loans of 60% 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
Last year Nat West announced they would no longer offer loans
to residents of Singapore! We’ve yet to establish why and believe this is under
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 Nationwide ‘merger’.
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
……. 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 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
www.google.com For mortgages there is no need to look further than
Google, using the key words, expat mortgages, expatriate mortgages and expat buy
www.zoopla.co.uk A new and very comprehensive property price
www.nethouseprices.com This 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 registry.
www.homecheck.co.uk With a UK postcode
the site will tell you about any environmental/pollution/flooding and subsidence
risks to the property.
www.upmystreet.com is a useful agent’s site to see what property is
on the market.
www.mortgageslaidbare.info The Financial
Conduct Authority no nonsense guide to mortgages site.
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
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 have demonstrated for many years that the persistency of expatriate loan
books is superior to that of domestic books.
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
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
Tel: 01932 830660
Fax: 01932 829603 August 2015