UK Property Finance for Foreign Nationals

It is also popular for second homes, and a base in London is seen as an asset around the world. But it is not just residential property. Demand for UK property is high and this has contributed to steady growth in the value of property of all kinds, from high-quality flats and penthouses to commercial units. High rental demand and increasing rent prices offer an increasing return on investment. 

Who can invest in UK Commercial Property?

There are actually very few restrictions on who can buy property in the UK. The main barrier to investing in UK property is the cost. Buying property in the UK often involves long-term finance, such as a mortgage, which is secured on the property itself. In the current low-interest financial environment, a mortgage can actually be a cost-effective way to acquire property of all kinds and, with interest rates remaining low, it can make sense to obtain mortgage finance, even if you have the funds to purchase a property outright.

What’s more, there are few restrictions on who can apply for a mortgage with a UK lender. As long as their country of residence is on the Financial Action Task Force (FATF) list, you may be able to apply. FATF is an inter-governmental body that sets standards and promotes the effective implementation of legal, regulatory and operational measures to combat things like money laundering. However, with a highly saturated and fragmented market, as well as the strict criteria of traditional lenders, many foreign nationals can find it difficult to access the property finance they need. Interest rates can be higher than for UK residents, background checks stringent and deposits are likely to be much larger than those required of UK residents

As you might expect, lenders have experience-based criteria for applicants and some types of asset class require more experience from the landlord for a lender to consider them for finance - but experienced landlords will be able to invest in HMOs, Multi-Units and Holiday Lets as well as properties such as factories, industrial units and shops, plus semi-commercial property such as residential flats with a retail unit below.

What kinds of property can you buy?

• Residential property as an investment - a home which you may let out to tenants. You may need to demonstrate that the return from the rent will cover the mortgage interest.
• Commercial property for a business - if you run an international business, buy property such as warehousing to use as part of your business may be a sound investment.
• Commercial property as an investment - you can buy commercial property, from an individual shop or unit to a complete trading or industrial estate.

.At Rangewell, we can help you find the lenders you need, whatever your property plans.

How difficult will it be? 

in theory, there should be no difficulty in getting a mortgage on a UK property as a foreign national. The property itself will provide security for the lending. However, lenders want to be sure they will be repaid and may see foreign applicants as presenting an additional risk. It is more about your credit history than where you were born and where you live.

To be considered for a UK mortgage, lenders will want to see that you’re allowed to be in the UK and earn money and that you have a good credit history in the UK. You should make every effort to build up a good credit score. This will mean opening a bank account, setting up some direct debits and making sure you pay your bills on time. 

If you’ve only recently moved to the UK, you might find it takes a while before you can be considered for a mortgage.

Other requirements

• A deposit - You may need to provide at least 25% of the total purchase price of the property as a deposit. This is used towards the purchase. It demonstrates to the lender that you are committed to the purchase of the property and will not simply walk away if your plans change. The deposit actually remains invested in the property.
• A source for your funds - The funds for your mortgage must be traceable to a legitimate source to make a successful application, which avoids the possibility of money laundering.
• Your employment status - If you are employed by a multinational organisation, it will be easy to prove your income. You will need a reference from an international accountant if you own your own business or are self-employed.
• Net worth and net assets - Holding cash and shares, rather than property as part of your net worth will allow you access a wider range of lenders.
• Size of borrowing - If you are not a UK resident, or if the majority of your income is generated internationally, you may need to borrow a large sum to secure a mortgage, perhaps over £1 million. Placing Assets Under Management (AUM) with the lender may give you access to a broader choice of lenders.

If you’re an EU citizen you should be eligible for a mortgage if you have:

• lived in the UK for at least 3 years
• a UK bank account
• a permanent job in the UK

If you were born outside the EU and have permanent residency or indefinite leave to remain lenders will want evidence that you have:

• lived in the UK for at least 2 years
• a permanent job in the UK
• a UK bank account
• a sizeable deposit (as much as 25%)

If you don’t have permanent residency, you might still be able to apply for a mortgage if you have:

• A Tier 2 work visa
• A Family visa
• A UK Ancestry visa
• A Residence card

If you cannot meet these criteria, it may still be possible to arrange the funding to buy property, but you may need to take out a secured loan as opposed to a mortgage.

Buying through a Special Purpose Vehicle (SPV)

If you are buying through an SPV, lenders will need to know in which jurisdiction it is located, as well as receive a personal guarantee for the SPV. It is possible to get a lender on board if you wish to purchase through an SPV, however, this will depend upon its location and structure type.

The lending process

The exact paperwork you'll need will depend on the lender. However, you can expect to be asked for :

• Copies of your personal identification documents or passport
• Proof of legal residence in the UK
• Documents to prove you're creditworthy, such as a credit check, bank statements, proof of your wages, your P60 benefits statement or a letter from your employer
• Documents to prove the affordability of the mortgage such as household cash flow statements, utility bills or bank statements which confirm that you can afford the monthly payments.

Once you have an offer accepted on a home, you’ll have to hand over more paperwork, such as a property valuation and survey to prove it’s priced fairly.

How Rangewell can help 

If you are a foriegn national currently living abroad you are looking to invest in a buy to let for the first time, expand your portfolio of properties in the UK or remortgage an existing one, we can talk you through the various options that might be available. We have arranged mortgages in the UK for foreign national clients who reside throughout the world: in the Far East, the USA, Africa, and Europe. We aim to make the process as smooth as possible for our clients, regardless of how complex their needs.

Buying any business with property involves high costs, and it is important to have expert help to get the kind of funding that is right for your plans.

Rates are crucial. Even a fraction of a percentage point can make a substantial difference to what you will actually repay each month, and understanding fees and penalty charges are also important to avoid extra costs. 

Borrowing can be made more challenging still by the fact that there are many different lenders who may be prepared to offer funding. Each has its own approach to interest rates and fee arrangements, and comparing them all may require expert knowledge to fully understand what is really being offered.

At Rangewell, we work with lenders across the market - and we can call on the expert knowledge you need. It lets us ensure that you have the financial solutions you need when you are considering a business purchase. Our knowledge can not only help you secure the funding you need - it can save you a great deal of cash.

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.