Many British expats are now thinking about moving permanently back to the UK because of the significant geopolitical and social developments like Brexit, Covid-19 and limited free overseas healthcare provision regardless of citizenship. But with an increasing age profile and no proof of income how can an expat purchase UK property?
18% of all expats living abroad are 60 years or older according to Statista and whilst there’s no regulatory maximum age limit on obtaining a mortgage in the UK, mortgage lenders do normally set an age limit between 65-80 years old. If you’re over 65, you may still be able to get a mortgage, however, you may have to accept a shorter mortgage term and higher interest rates.
A further 28% of expats are aged between 46 and 60 years old, who may find they’re also impacted by shorter terms being offered on mortgages due to their age.
According to Statista, the majority of British expats are located in Spain (302,020) followed by Ireland (293,061), France (176,672) and Germany (98,553).
Why are expats returning to the UK?
The desire to move back appears to be focused on three key factors: finance, healthcare and social well-being.
In an expat study by NatWest International Personal Banking, 97% of expats stated they are dissatisfied with their experience abroad, citing an increased cost of living as a cause for concern. Furthermore, 99% of those asked pointed towards constant financial worries as a deciding factor on a return to the UK.
As the population ages, their healthcare needs increase and provision for healthcare isn’t always free in foreign countries – even if you’re a resident. Take Spain for example, according to the UK Government “Once registered for healthcare, basic state services are free. There are some things that you may need to pay a percentage of the cost for, such as orthopaedic services. Spain uses a co-payment system where residents usually pay between 10% and 60% of the cost of prescription medication.” The NHS’ free healthcare can be a big draw to return back to the UK for those with ailing health.
Another reason stated in the survey for expats returning was missing family and friends based in the UK. It seems technology such as Zoom and Facetime, whilst both have been widely adopted, may not quite meet the social needs of expats.
Where will expats live after returning to the UK?
Many expats chose to live abroad in search of a better quality of life and of course a better climate. It’s logical to anticipate that expats upon their return will be drawn to the South of England because of the generally warmer conditions.
Property prices have however increased disproportionately along the South coast when compared to the Northern region, with the biggest average property price discrepancy between the South East being some £235,591 more expensive than the North East in February 2023.
Expats and property investment
There are many different drivers for property purchases but the most common are investing and income generation, as well as to reside in.
Investment properties for income generation
The UK is a great choice for investing in property, as it has an established and reputable housing market that can provide good returns. Investing in the UK also allows expats to benefit from potential rental income, tax advantages and capital growth opportunities. Aside from the turmoil in November around monetary policy, the British pound is still considered a strong currency which makes this an attractive option for those who have funds denominated in foreign currencies.
For those looking to purchase an investment property, the UK has a wide range of options depending on budgets and needs. Whether the expat is a first-time investor or an experienced investor there are plenty of opportunities available, such as buying a buy-to-let flat or house, purchasing land for development or converting an existing property into rental flats.
Whether the property is to live in or a buy-to-let investment, whatever your circumstance, a bridging loan might be the easiest way to buy a UK property as an expat.
What is bridging finance for expats?
Expats can use bridging loans to ‘bridge’ the gap between financing a property purchase before selling another asset in the UK or abroad. For example, if you’re waiting on your foreign property to sell but wish to access funds to facilitate a quick purchase of a new property in the UK then bridging finance may be able to help. You could effectively buy your next property before an existing property is sold. Bridging finance may make it possible to access money on a short-term basis.
Your ability to obtain bridging finance will be influenced by your credit history, the value of any assets you now own, the projected value of the property you intend to purchase, and the duration of the loan.
Reasons why bridging financing may be the best option
You may have already realised that you’ll need to be able to move quickly when you decide to buy property in the UK.
The fact that demand for UK real estate is outpacing supply and has done so for decades, has obvious consequences if you’re an international buyer.
If you are a UK citizen living overseas, the standard mortgage application procedure typically takes a lot longer, which puts you at a disadvantage compared to buyers who are residents in the UK.
If a delay in raising funds or securing a UK mortgage loan means you are going to miss out on a new property opportunity, a bridge loan may be an invaluable solution if sought alongside professional advice from a qualified financial adviser.
The advantages of bridging finance, compared with long-term mortgage finance
- Speed. Bridging finance may enables you to move fast and secure the deal against competing buyers. You may set up a bridge loan in as little as three to five days, and it practically provides you the same purchasing power as people who pay cash.
- Flexibility. To provide you the chance to jump on an opportunity in case you visit the UK again and come across a property you like. If you’re an expat back in the UK on a visit, you may be time-pressured and trying to pack a lot in – including property buying. Longer-term mortgage finance naturally takes a lot longer to complete, while short-term bridging finance is generally fast.
- To secure a quick-purchase discount. Keen sellers may be ready to shave the price in order to get a confirmed sale in the bag sooner rather than later. So there may be a higher chance of receiving a buyer discount if you can move quickly.
- Refurbishment. You want to do some refurbishments before moving into a property and you don’t want to spend your brief stay in the UK living on a construction site because you had to sell your prior home to pay for the renovations. Bridging finance might enable you to complete renovation work, improve the value of your new property and secure a longer-term mortgage on a higher-valued property.
- You need time for a property to find its full market value. Short-term lending might save you from having to accept the first buyer that comes forward if you’re waiting for the sale of your current house and want to realise its full market value.
Things to consider if you’re an expat considering bridging financing
Lenders have a harder time confirming your identification and income when you’re an expat.
The many kinds of identification needed heavily rely on a “footprint” in the UK, which includes things like bank accounts, utility bills, council tax records, the electoral register, etc.
It can take a little longer since some lenders demand “wet signature” original paperwork rather than electronically validated paperwork.
To speed up the process, a reputable mortgage broker will let you know about all the criteria and streamline your document submission.
It is feasible to provide many sources of proof, however, not all lenders are willing to be accommodating. Because there are fewer willing lenders, there is sometimes less competition, which raises rates.
To prepare your accounts, you must work with a reputable international accounting firm.
You’ll need a solicitor who is either based in your country of residency abroad yet knowledgeable about UK property law to check your papers or is based in the UK but can effectively communicate with a client who is in a different time zone.
Normally, it’s advisable to hire a UK lawyer with knowledge of bridging finance. However, in order to expedite the process, it might be possible to use the services of your lender’s lawyer.
If your lender requires a face-to-face meeting, be prepared to plan your return journey around that meeting.
Will finance take longer to arrange because I’m an expat?
The ease with which bridge financing can be established is one of its most beneficial aspects as the value of the property you already own serves as the primary security for your bridging finance rather than your current or projected income.
Depending on the loan-to-value (LTV) of the borrowing you require, a desktop appraisal may be adequate. A desktop valuation stops you from requiring a surveyor to visit the property to assess its value, but its use is usually for low LTV situations only.
An experienced expat broker will give you all the details you require to compile, bundle, and hasten the approval process for your application. Unless your situation is extremely problematic, it is possible to set up bridging funding for expats in a period of time that is comparable to local arrangements, often in less than a week.
Rounding things up
Bridging finance may be the perfect solution for expats who are in need of a quick injection of capital. It could give you access to funds within days with no income requirements and it is flexible enough to suit most needs – from buying a new property before selling your existing one, to making renovations or releasing equity.
By preparing for the application process early, you can minimise the associated time and paperwork required for a successful loan.
With the help of an experienced expat broker, bridging finance could be just what you need to realise your plans faster.
At the end of the day, when used alongside advice from qualified financial advisers, bridging finance is an incredibly powerful tool that enables expats to achieve their big next move.