Remortgaging UK Rental

[Paul DDDDDDDD]

Hi all,

Not sure this is the correct section, also not sure if this topic hasn't been raised before, but have trawled through in the search section and couldn't find a match.

My wife and I have been in Oz for 6.5 years now and have rented out UK property for this time.  When we arrived our, at the time mortgage deal was expiring and I painfully set about getting a new mortgage from Oz, which took ages because of the complications of living abroad.  We eventually found one with Halifax and have been on this since.

With the interest rates on the up we'd like to lock into a fixed interest rate deal as that helps with managing our rental property, but after phoning Halifax they don't offer any rental mortgages at present.  I have a feeling it'll be a painful experience trying to find another company we can use.

Has anyone on here tried to do this and had a good experience, if so any recommendations on companies to try.

Any advice or help would be much appreciated.

Thanks,

Paul.

[Ken]

Hi Paul,

There are a love of threads on this sort of subject in the Money and Finance section, but unfortunately there doesn't seem to be a solution.

While you found it difficult to find a new mortgage from Oz 6.5 years ago, it was comparatively a lot easier back then than it is now. Back then banks were avoiding (or perhaps more accurately trying to evade or just plain ignoring) Australian Financial Services Regulations. The Australians have tightened up since then and made it clearer that Australian Financial Services Regulations apply to mortgages worldwide taken out by Australian residents (even if you sign the paperwork abroad - which is a dodge that worked at one time).

But of course if the property is in the UK then UK Financial Services Regulations apply. Trying to comply with both sets of rules at the same time (which means any communication with or on behalf of the lender must comply with both sets of regulations including that the person you're dealing with is registered in both countries) is practically impossible so most UK lenders have thrown Australian Residents in to the too hard basket.

If you find a solution (or anyone reading this has found one) there are a lot of people on PIO who will want to hear it! 

[Paul DDDDDDDD]

Hi Ken,

Thanks for your response to my query, the financial regulations part makes a lot of sense and I understand why it's hard for UK companies to offer mortgages to Oz residents if they're to adhere to two country financial regulations.

I'll keep doing investigation and if I find something will post what I find on here, otherwise it's a case of watching interest rates rise and our mortgage payments with it, only 14 years of the mortgage left

Paul

[Aussiepom]

Did you learn anything from further research?

 

Paul

[Jd295]

Anyone find a broker who can help with this? 

[Aussiepom]

Hi All,

I've been reading posts for many months now where people have struggled with the restrictions around providing UK buy-to-let mortgages to UK expats in Australia.  Largely the difficulties arise because the mortgage provider is required to be regulated both in the UK and Australia, meaning they need a presence in both countries.  This significantly limits the size of the market.  Prices for these products quoted to me by brokers have been much higher than equivalent products provided to UK residents.  Further the broker fees have been in the thousands, not hundreds.  This might be a familiar story for some of you, or at least it will become thus in the not too distant future.

The good news is that I've just had a really positive experience on this front.  After speaking to many brokers and being provided with higher level interest rates and exorbitant broker fees, i was able to find a solution that was equivalent to what i would pay and receive in UK.  I've just completed on the mortgage. The answer was that I engaged directly with HSBC UK.  The only difficulty was the fact that I had to do it all myself without a broker.  On the flip side it gave me access to exactly the same products UK residents receive.  In doing so i'm saving a lot of money and have been able to secure a long term fixed rate mortgage so I can carry on out here in Australia and not have to deal with this headache again for quite some time.

To the details.  HSBC offer 2 avenues for mortgages to Ex pats in Australia:

The first route is via an Ex Pat mortgage through HSBC Expat.  This one was prohibitive for us as it requires a certain amount of capital (i believe it was £60k+, maybe more) to set up an HSBC offshore expat account.  This might be appropriate for someone with money sat around.

The second route is via a regular buy-to-let mortgage route.  The website link is here:  https://www.hsbc.co.uk/1/2/mortgages/buy-to-let-mortgages

Please note the eligibility criteria. Critically you need to have lived in the house at some point since you bought it for at least 6 months - so this mortgage doesn't suit you if you are an overseas landlord looking to buy an investment buy-to-let.  Also when we applied as an overseas landlord the minimum annual salary requirement (single or joint, depending on the application), was £75k - although i cannot find the requirement on their website anymore so perhaps things have changed since we started the process in January.  They also say that the rent must be 145% of the mortgage repayments.  I'm not sure whether this has changed since we started our application but they were only looking for 145% of the interest portion of our capital repayment mortgage when we applied.

The whole process took about 8 weeks from start to finish and it was painful because of the speed of mail and general lack of competence of some of HSBC staff.  Note that we had to get some documents notarised here in Australia which cost about $150.  The only document that we actually had to send by post was the signed mortgage deed.  Everything else we were able to scan and send.  We had our managing agent for the UK property issue the current tenancy agreement directly to the conveyancing company which was acceptable.

This was a welcome relief to us, we are able to save at least £200 a month on what the brokers were quoting with this HSBC product, which over the long term is a really meaningful saving.

I'd be more than happy to answer any questions or provide additional feedback on the process if anyone's interested.  

Cheers,

 

The Ozzie Pom

Edited March 14, 2018 by Aussiepom

[Paul DDDDDDDD]

Hi Aussie Pom,

Thanks for the information above, this is the most information around getting a mortgage from Australia I've seen, and would suggest for others to.

I checked with HSBC last night and like you suggested there are a number of criteria that needs to be fulfilled.

1) Must pay tax in the UK

2) Must have lived in the property for at least 6 months

3) Either you or your partner must earn more than 75k GBP

4) Equity in the property must be more 25%

5) Rent must be 145% of interest only Mortgage repayments

It all sounds a bit simple, but like you if it goes through I've save on my current deal.

Once again thanks, will see how far the application goes.

Paul.

[Aussiepom]

Paul DDDDDDD.

I agree about the simple part.  I felt staggered when i did the initial mortgage call on the phone with the guy.  I spent an hour supplying him with details, didn't communicate any 'terminological inexactitudes' and got through the other end of the call with a confirmation that we should be eligible and he'd send the paperwork out.  I was so shocked that I actually asked him the question,  'are you sure you've got everything set up here correctly?  I'm not going to find out a mistake was made and subsequently I'd be ineligible?'

My recommendation if you want to get it all sped up is that  you try to get access to the online site where you can supply / upload the documents.  If you wait until they send stuff out in the post you'll be waiting forever.  Even last week we received a letter sent on the 5th February asking us for documents to support our status.  4 weeks delivery is nuts - they use some third party mail company which routes it all through Germany...

Oh and a final note.  If you're with Vodafone and you have international minutes included in your plan, they don't cover UK 0800 numbers - I had to spend an hour otp with Vodafone getting them to refund about $60 because i'd called UK 0800 numbers.  From that point on I used Skype which lets you call UK 0800 numbers for free.  Not tried it with the 0300 numbers.

Please keep us updated - keen to see if others get to benefit from this as well.

To the points you raised:

1)  We were never asked to provide evidence of the fact that we pay tax in the UK.  How did they cover this off with you?  Did they ask on the call whether you were a UK tax payer, or whether you were a citizen / resident of the UK?

3) Just to clarify, they told us that for a joint mortgage on a jointly owned property then our joint salaries combined had to be above £75k per year.

Cheers

 

Aussie Pom

Edited March 18, 2018 by Aussiepom

[Aussiepom]

Actually,

I just found their detailed lending criteria:

 

http://www.intermediaries.hsbc.co.uk/criteria/buy-to-let-lending-criteria.html

 

Aussie Pom

[Aussiepom]

It's been a couple of months since I raised this.  Anyone else been able to take advantage of this?

[Paul DDDDDDDD]

We're just going through the process now to remortgage, everything going okay (touch wood) so far, just at property valuation stage.

 

Fingers crossed.

[dexterslab12]

OH. MY. Thank you so much for sharing this information @AussiePom 

Have been in a similar position for the last Year and had previously engaged a specialist expat mortgage broker who could only find me very limited options that were not compelling enough for me to re-mortgage too.

This thread is great news for me and I've started the application process with HSBC as I believe I qualify under the criteria. If I can get off my 5% tracker mortgage onto something less which is fixed I will save a FORTUNE!

Can I just ask though with regards to the application you completed, did you convert back into GBP your AUS financial details (income and outgoings) per the questions it asked?

It just seems slightly weird to me filling in a form that reads as if I am working and live in England, even though on the personal information I was clear about where I am currently residing and live. Just want to make sure I am filling in the right form!!

Thanks!

[Aussiepom]

10 hours ago, dexterslab12 said:

OH. MY. Thank you so much for sharing this information @AussiePom 

Have been in a similar position for the last Year and had previously engaged a specialist expat mortgage broker who could only find me very limited options that were not compelling enough for me to re-mortgage too.

This thread is great news for me and I've started the application process with HSBC as I believe I qualify under the criteria. If I can get off my 5% tracker mortgage onto something less which is fixed I will save a FORTUNE!

Can I just ask though with regards to the application you completed, did you convert back into GBP your AUS financial details (income and outgoings) per the questions it asked?

It just seems slightly weird to me filling in a form that reads as if I am working and live in England, even though on the personal information I was clear about where I am currently residing and live. Just want to make sure I am filling in the right form!!

Thanks!

Great question!  Yes it's weird.  You should do the conversion to GBP and put GBP values in there.  We submitted Australian pay slips and this was fine.  You're right, the form filling process could do a better job of adapting to the typical fields we fill in on Australian forms.

[dexterslab12]

4 hours ago, Aussiepom said:

Great question!  Yes it's weird.  You should do the conversion to GBP and put GBP values in there.  We submitted Australian pay slips and this was fine.  You're right, the form filling process could do a better job of adapting to the typical fields we fill in on Australian forms.

Thanks for your feedback! That's what I've done, but now i'm confused about the question on the 'about the property page' that asks...

"'do you or any other applicant receive any income in a currency other than pound sterling"

What did you put here? If I select 'yes' the help icon for the next question ('if so which currency') says...

" if you receive income in more than one currency please choose the currency that will be most important for the purpose of paying the mortgage'.

For me, that would be the rental income I get from the tenants which is in GBP... I'm therefore leaning towards saying 'no' to the original question relating to the income....just interested if your situation is similar to mine (owning a property with tenants already in) and how you approached this question....

Thanks in advance for your help.

 

[dexterslab12]

I tried both answer variants and the DIP amount came out the same regardless. Interestingly/frustratingly the DIP amount is a fraction less than my outstanding mortgage and for a LTV of 54% This was also under the DIP as well:

"For applications that include adding or removing someone from an existing HSBC mortgage, if you do not wish to borrow additional funds and the Decision in Principle amount above is lower than your current HSBC Mortgage balance, please do not pay the shortfall"

So looks like I'll be ringing them as soon as the timezones align to see if they can't stretch it to the full amount. If not I'll pay off the difference and take them up on the offer they will give me.

Anything to get me off the current mortgage rate i'm on!!

 

[Aussiepom]

17 hours ago, dexterslab12 said:

Thanks for your feedback! That's what I've done, but now i'm confused about the question on the 'about the property page' that asks...

"'do you or any other applicant receive any income in a currency other than pound sterling"

What did you put here? If I select 'yes' the help icon for the next question ('if so which currency') says...

" if you receive income in more than one currency please choose the currency that will be most important for the purpose of paying the mortgage'.

For me, that would be the rental income I get from the tenants which is in GBP... I'm therefore leaning towards saying 'no' to the original question relating to the income....just interested if your situation is similar to mine (owning a property with tenants already in) and how you approached this question....

Thanks in advance for your help.

 

We did ours over the phone (although we could see the forms online).  If i recall correctly, we flagged that our income was in AUD.  I'm not sure i recall being asked which currency was more important for paying the mortgage.  I guess the answer would be dependant in part on which (if any) of those potential answers is what they look at when it comes to the total amount they will lend?  Best give them a call.  We didn't have any problem calling.  Given that to them Mortgages is a sales motion, not customer services, they have plenty of willing and able staff to hand to help you.  Just remember that calling +44800 xxxxxx is not always free from Australian mobiles with UK call allowances.  I recommend using skype, where +44800xxxx is free.

[Aussiepom]

16 hours ago, dexterslab12 said:

I tried both answer variants and the DIP amount came out the same regardless. Interestingly/frustratingly the DIP amount is a fraction less than my outstanding mortgage and for a LTV of 54% This was also under the DIP as well:

"For applications that include adding or removing someone from an existing HSBC mortgage, if you do not wish to borrow additional funds and the Decision in Principle amount above is lower than your current HSBC Mortgage balance, please do not pay the shortfall"

So looks like I'll be ringing them as soon as the timezones align to see if they can't stretch it to the full amount. If not I'll pay off the difference and take them up on the offer they will give me.

Anything to get me off the current mortgage rate i'm on!!

 

I would have thought that they would look at your total income?  in any case, a telephone call certianly does make a lot of sense.  Another thing to consider is whether your valuation of the property is correct?  It may be worth more now and as such your equity may be greater.  Have you taken a look at your property value on Zoopla?  If not, go take a look at it and property value of similar properties in the same street; chances are some have sold recently which you will be able to see - this will give you a good indication on current value.  This may be what you need to improve your LTV outlook.

[dexterslab12]

4 hours ago, Aussiepom said:

I would have thought that they would look at your total income?  in any case, a telephone call certianly does make a lot of sense.  Another thing to consider is whether your valuation of the property is correct?  It may be worth more now and as such your equity may be greater.  Have you taken a look at your property value on Zoopla?  If not, go take a look at it and property value of similar properties in the same street; chances are some have sold recently which you will be able to see - this will give you a good indication on current value.  This may be what you need to improve your LTV outlook.

Appreciate your feedback Aussiepom. Yea - I did check Zoopla and then I followed up with the estate agents to confirm the numbers Zoopla was giving me as it does help with my LTV. I rang HSBC yesterday to run through the issues I was finding with their online form but their system to book me in with the right sales person to go through the process over the phone was down so they told me to try again today. Will let you know how I get on. So far though all the signs are positive so I do appreciate your input on this thread! Fingers crossed!

 

Edited June 8, 2018 by dexterslab12
grammar

[dexterslab12]

On 08/06/2018 at 07:34, Aussiepom said:

We did ours over the phone (although we could see the forms online).  If i recall correctly, we flagged that our income was in AUD.  I'm not sure i recall being asked which currency was more important for paying the mortgage.  I guess the answer would be dependant in part on which (if any) of those potential answers is what they look at when it comes to the total amount they will lend?  Best give them a call.  We didn't have any problem calling.  Given that to them Mortgages is a sales motion, not customer services, they have plenty of willing and able staff to hand to help you.  Just remember that calling +44800 xxxxxx is not always free from Australian mobiles with UK call allowances.  I recommend using skype, where +44800xxxx is free.

Hey Aussiepom - Out of interest did you use their conveyancer (if you even needed to) or did you appoint your own? 

I had my call last week - the call lasted 3 hours (!), but no issues were raised with anything I had provided them and we're just waiting to hear back from the underwriters (fingers crossed!)

Thanks!

 

[Aussiepom]

Great to hear that things are progressing.  I recall the calls taking a while, they were very detailed.  I remember thinking. during every call.. 'this seems to good to be true... at some point i'm going to find out that because i live in Australia i won't be eligible and someone hasn't read a rule in their call script', yet it was all good.

I used their conveyancing firm.  It was frustrating initially basically they use an intermediary.  Once they connected me with the law firm it was pretty quick.  For me, the only documentation i needed to send by snail mail was the witnessed mortgage form, for everything else they accepted electronic submission.

Keen to see how it turns out for you.  Good luck.

[PomPete]

Hi all,  just wanted to say that I used www.expat-mortgages.co.uk for our last two mortgages and we now use their sister site www.expat-lettings.co.uk as our property managers. I did a lot of research and have bought and sold a few times since being in oz, the big banks felt safer but I can't fault Expat. Unfortunately  the UK house buying process is a lot more lengthy and complicate than in Central Queensland!