Expat Remortgage Interest Only Adverse Credit

The Client

Our client lives in Canada and has a residential property in the UK that she has been letting out since she left the country in 2016. As a UK-born resident, the client moved to Singapore initially and then on to Canada to live. The property is currently on shared ownership with the client wishing to purchase the property up to 75% and remove the shared ownership aspect entirely.

The client has good income and an established job, however she does have some adverse credit including missed mortgage payments. One missed mortgage payment was just over a year ago, and the other two within the last three years.

The Scenario

Initially the client wanted an Expat capital and interest mortgage, however once we established the clients’ full circumstances there were multiple factors to consider. Points for considerations included, the fact there is the adverse credit, no other property is owned and the client used to live in the subject property. We also had to be mindful of the fact that the majority of lenders that would be considered more ‘specialist’ in the Expat sphere do not offer capital and interest. There are also some lenders that simply do not allow a remortgage away from shared ownership.

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The Solution

A five year fixed mortgage was always going to be the only option in regard to rental affordability. However, once we’d checked the case with the mainstream Lenders due to the issues identified above when all put together, the case unfortunately didn’t fit with any of them.

However, we found a Specialist Lender that was comfortable with what was regarded as “consumer lending” by many, and they had criteria on missed mortgage payments, but only within the last year. Additionally, the Specialist Expat Lender was fine with the shared ownership aspect, and they also offered capital and interest mortgages.

With the benefit of our specialist advice the client was able to make an informed decision. The client was keen on capital and interest as previously mentioned. However, it left the client very close to coverage required due to the rental amount received – also, as they were paying management fees it didn’t fit with the Lender overall on this basis. We therefore suggested the client opt for an Expat Interest only mortgage – reason being that while the Lender put forward doesn’t allow intermittent overpayments, they do allow the client to pay it all off within the 5 year fixed without any Early Redemption Charges (ERCs).

In this scenario, as long as the client keeps their credit clean, in a couple of years, they will probably be able to remortgage to a better lender, change it to Capital and Interest mortgage and actually pay less and there won’t be any exorbitant early redemption charges. The client was delighted by this solution as it ultimately ticked all her boxes.

Summary

Key Factors to consider for Expat Mortgages in the UK:

• Not all Expat Lenders offer capital and interest.

• Adverse credit makes Expat Mortgage Lending Specialist and also limited.

• A lot of these Expat Lenders consider if you’ve ever lived in the UK and have any other properties in the UK.

• Remortgaging away from shared ownership isn’t widely available.

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