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Expat Buy to Let Criteria

Smiling man enjoys a conversation with his wife after applying for an Expat Buy to Let mortgage with the Marsden.

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Last updated 12 April 2023.

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Applicant Details

25

85 (at the end of the mortgage term) – please refer to our Maximum Mortgage Term Guidelines.

2

£37,500 per application.

Please see Currency Conversions under 'Income' for more information on how we assess foreign income.

Lending to companies or portfolio landlords is not accepted.

For sole applications: Applicant must be a UK citizen.
For joint applications: One of the applicants must be a UK citizen with the other applicant having settled status or permanent right to reside in the UK. The salaried applicant must be the UK citizen and contributing at least 100% of the total earnings in respect of the minimum income requirements.

Maximum Mortgage Term Guidelines

If earned income is being used to support mortgage payments, the mortgage must be repaid by the client’s retirement date unless pension or savings income can be evidenced.

Credit Criteria

CCJs/Defaults within the last 3 years are not acceptable.

CCJ’s/Defaults => 3 years prior to application are acceptable up to a maximum £2,500 – subject to an explanation and being cleared/satisfied 12 months prior to application.

No other adverse entries must show on credit file.

Mortgage, loan, HP arrears and missed payments => 3 years prior to application: Status 1s and 2s are acceptable – status 3 or above not acceptable.

Mortgage, loan, HP arrears and missed payments within the last 3 years are not acceptable.

Credit card, mail order, utility commitments => 3 years prior to application: Up to and including status 2s are acceptable.

Credit card, mail order, utility commitments.

Employment Status

Applicants in probationary period are acceptable, providing they are in like-for-like employment with no gap in employment.

The applicant must have been in their current business for a minimum of 3 years.

Acceptable dependent on length of contract and whether it has been previously renewed.

Deposit Details

Applicants’ own deposit or gift from an immediate family member (spouse, parent, grandparent, sibling, child or grandchild) is acceptable. Evidence of the source of deposit is required.

Income

Interest Coverage Ratio (ICR) – 125% minimum rental cover based on reference rate of 5.5% or chosen product rate + 2% (whichever is the higher of the two) for UK basic rate tax payers, or for higher rate tax payers, 145% at 5.5% or chosen product rate + 2% (whichever is the higher of the two).

For our 5-year fixed rate products, we now offer a revised stress rate as follows: 125% at product rate for UK basic rate tax payers, 145% at product rate for higher rate tax payers and 115% at product rate for top slicing cases for applicants paid in acceptable currencies only.

For any other products considered less than 5 years, if there is a rental shortfall and your applicant is paid in a currency which is on our acceptable currencies list, we will take a limited amount of earned income into our affordability assessment. The rental income must cover 100% at product rate + 2% as an absolute minimum, with the shortfall made up from earned income.

There are no currency restrictions on Expat BTL applications if the rental income passes the 125% at 5.5% or chosen product rate + 2% (whichever is the higher of the two) for UK basic rate tax payers, or for higher rate tax payers, 145% at 5.5%.

For like for like remortgage cases our Interest coverage ratio is product rate x 115%. 

Please note the following with regards to eligibility:

  • Maximum LTV 60%
  • We will only remortgage the current debt plus arrangement fees if added
  • ERCs to be paid from own funds if applicable and cannot be added to the mortgage balance
  • No change to property ownership – for example no transfer of equity
  • Remortgage must be a true Buy to Let remortgage, consent to lets on a residential mortgage are not eligible for this approach.

If earned income is being taken into account to support the loan, the mortgage term can only extend to state retirement age or the applicant’s declared retirement age, whichever is the lowest. Please see our maximum term guidelines on the following page for more information.

We require 3 years’ accounts in a format that is readily understood, in English. If earned income is to be considered, accounts must be available and produced by a recognised firm of international accountants as below;

• Baker Tilly International
• BDO
• Crowe Horwath International
• Deloitte
• Ernst & Young (EY)
• Grant Thornton International
• HLB International
• KPMG International
• Moore Stephens International
• PKF International
• PricewaterhouseCoopers (PwC)
• RSM International
• UHY International

Directors of Ltd Companies: We use salary plus dividend or net profit after tax, whichever is the lowest of the two.
Sole traders: We accept net profit after expenses but before local tax.

For applicants on fixed-term contracts of less than 6 months, the minimum period of employment with the same employer is 6 months. For those on contracts of 6 – 12 months or more, the contract must have been renewed at least once. If the contract is for more than 12 months, the applicant must be more than 6 months into the contract.

For Expat BTL applications there are no currency restrictions if the rental income passes our Interest Coverage Ratio of 125% at 5.5% or chosen product rate + 2% (whichever is the higher of the two) for UK basic rate tax payers, or for higher rate tax payers, 145% at 5.5% or chosen product rate + 2% (whichever is the higher of the two). See our Interest Coverage Ratio section for more information. Please note there is an exception that we wouldn’t accept currencies from countries listed on our Expat Country Exclusion List, which can be found on our Downloads page here.

When calculating foreign income, we look at the close exchange rate on the date of application with a haircut % depending on the currency.

 

We will apply a 10% haircut to the following currencies:

• US Dollar
• Euro

 

We will apply a 15% haircut to the following currencies:

• Oman Rial
• Norwegian Krone
• Swiss Franc
• Chinese Yuan Renminbi
• Emirati Dirham
• Saudi Arabian Riyal
• Hong Kong Dollar
• Kuwaiti Dinar
• Singapore Dollar
• Qatari Riyal
• Japanese Yen

 

We will apply a 20% haircut to the following currencies:

• Bahraini Dinar
• Canadian Dollar
• Danish Krone
• Swedish Krona
• Bermudian $ (BMD) (if pegged to US$)
• New Zealand $ (NZD)
• Australian $ (AUD) (If not residing in Australia)

 

For all other currencies not mentioned above we would look at the lowest result of the three stress tests below: 

• Current close rate minus a 20% haircut
• Lowest rate position over the last 10 years
• Difference of peak to trough from 5 year chart as swing % of 5 year high position. This swing % is then deducted from 5 year current close.

Acceptable Countries

We’re unable to accept any new applications from your clients who are residing in, or have financial links to the countries listed on our Expat Country Exclusions List (PDF).

If you have an expat client who doesn’t reside in, or have financial links to one of the countries listed, we’ll consider your application.

Mortgage Details

Minimum: £100,000 or product dependent

Maximum: £750,000

Minimum: 5 years

Maximum: 35 years

We will consider remortgage applications where the applicant has been the registered owner for the past 6 months.

Your client can apply for a mortgage on a repayment basis, or an interest only basis. Part and part is not accepted. BTLs will be stressed on I/O even if the application is on a repayment basis, providing the applicant appears to have the means to support the higher monthly payment (monthly surplus and a good credit file/evidence maintained a repayment mortgage with their current lender).

A new residential mortgage can be considered where the applicant wishes to retain their current property on a BTL basis.

We need to be satisfied that the existing mortgage will be converted to a permanent letting arrangement and we require rental coverage of 125% of the mortgage commitment based on 5.5% or chosen product rate + 2% (whichever is the higher of the two) for UK basic rate tax payers, or for higher rate tax payers, 145% at 5.5%.

Anticipated rental income must be confirmed and may be required to be evidenced by a letting agent.

A maximum of 3 mortgaged BTL’s can be held across any number of lenders, maximum exposure £1,500,000. We do not accept portfolio landlords, which applies if an applicant holds 4 mortgaged BTLs.

No family members, multiple tenancies, holiday lets, house with multiple occupancies, company lets, student lets.

All subject to assured shorthold tenancy agreements. AST requirements; 6 months minimum. Can accept up to 24 months with standard break clause included.

Not acceptable.

Property Criteria

£167,000

England and Wales.

Properties must be of traditional construction.

Timber framed properties may be considered if brick clad.

New build houses subject to NHBC/Local Authority Building Control Scheme/Premier/Checkmate (Castle 10)/Buildzone/Zurich/ICW (International Construction Warranties)/AHCI Ltd or Professional Consultants
Certificates – maximum 70% LTV.

Purpose built flats/maisonettes are acceptable (new builds not acceptable). Must be up to 60% LTV and leasehold.

Flats/apartments more than 4 storeys. If above 4 storeys, they must be serviced by at least 1 lift. Flats above 6 storeys are not acceptable.

Properties must be of traditional construction.

properties (even if applicants intend to convert back to residential).

Holiday homes.

Prefabricated properties.

Studio flats and ex-local authority flats/maisonettes.

New build flats.

Flats above commercial property.

Properties under 5 storeys with a flat roof are unacceptable security.

Any construction covered by Housing Defect Legislation such as high alumina cement, prefabricate reinforced concrete, large panel system, BISF.

Any property where an EWS1 form for wall cladding is required.

Tenure

Both freehold and leasehold are acceptable for houses.

Freehold flats/maisonettes are not acceptable- leasehold only.

Flying freeholds – refer.

For leasehold, there must be a minimum of 85 years unexpired lease at the start of the mortgage and 55 years remaining at the end.

Service Agent Agreement

A Service Agent Agreement will need to be completed by your client before the expat mortgage is completed. This will confirm the name and address of somebody in England or Wales who will act as the Service Agent and who the Society can serve papers to should the borrower fall into arrears and possession proceedings need to commence.

Reasons for Additional Borrowing

• Home improvements
• Debt consolidation (maximum £30,000)
• Purchase of an investment or second home

Please note evidence would need to be submitted to satisfy the above.

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