Expat mortgage blow as another lender bars borrowing against property

Published:  12 Dec at 6 PM
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The market for expat home loans on UK property has been shrinking fast over the last year, with Nationwide now planning to pull the plug on mortgages for those who have lived overseas.

The UK’s biggest building society is the latest commercial lender to shut up shop for expats wanting to take out home loans. The issue, according to the sector, is that the overseas financial histories of expats cannot be tracked in the same way as those of UK residents.

UK credit bureaux tie credit records to UK addresses, and cannot connect with financial institutions overseas. Nationwide’s new rule states that UK mortgages and loans will not now be given to anyone who has lived abroad during the past three years.

The new rule is bound to affect expats whose contracts overseas are expiring and who wish to purchase property for their return to the UK. It is also expected to hit those living abroad and considering UK buy-to-let properties as an answer to the dire levels of interest on conventional investments.

Lenders including Nationwide are also hitting on UK borrowers by refusing mortgages requested by more than two applicants for the same property. Even worse news for expat borrowers is that Mortgage Works’ range of guarantor loans are being withdrawn.

Previously, such loans have proved useful, allowing expats to borrow whilst living overseas via a guarantor with a proven UK credit history. NatWest is the only major player left in the expat mortgage market, apart from a few niche lenders such as Shawbrooke Bank.

Most alternative sources insist on minimum loan sizes and deposits of up to 40 per cent, and secondary lenders offer bridging or private loans, but charges are massive and interest rates high. An even scarier prospect is that HM Revenue and Customs may well decide that a UK home negates non-residence, thus dragging unwary expats into its tax net.
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