Impact of move to Australia next year on arrangement of new fixed period remortgage on UK property

[GB1978]

Hi everyone, my wife and I have recently decided to trial a move to Perth next year and are now starting to get deep into planning. However before we get into some of the move specifics, I wanted to check on the impact of our move on my UK mortgage.

The fixed 5 year period for the mortgage on my current home is expiring in a couple of months and I am trying to arrange a new fixed rate deal, probably for 3 years. The intention would be to rent out this property from next year whilst we trial the Australia move and then potentially sell if we think we want to make a permanent move or return to have as our home again if we return. I have read a few things around mortgages of UK property on this forum and some of the complexities of being non resident and therefore just wanted to check something.

I did mention to my mortgage provider our potential plan to move abroad, and they said that I would have to apply for consent to let at the time but they did not see any particular issue with me being based in Australia for part of my mortgage period.

Therefore is the UK mortgage complexity that some people on this forum have referred to caused by the fact that they are a UK non resident at the time they need to arrange their mortgage rather than the fact they may have a UK mortgage and then moved to Australia?

Any perspectives from those familiar with this topic would be really appreciated!! Many thanks

[DeeTowers]

1 hour ago, GB1978 said:

Hi everyone, my wife and I have recently decided to trial a move to Perth next year and are now starting to get deep into planning. However before we get into some of the move specifics, I wanted to check on the impact of our move on my UK mortgage.

The fixed 5 year period for the mortgage on my current home is expiring in a couple of months and I am trying to arrange a new fixed rate deal, probably for 3 years. The intention would be to rent out this property from next year whilst we trial the Australia move and then potentially sell if we think we want to make a permanent move or return to have as our home again if we return. I have read a few things around mortgages of UK property on this forum and some of the complexities of being non resident and therefore just wanted to check something.

I did mention to my mortgage provider our potential plan to move abroad, and they said that I would have to apply for consent to let at the time but they did not see any particular issue with me being based in Australia for part of my mortgage period.

Therefore is the UK mortgage complexity that some people on this forum have referred to caused by the fact that they are a UK non resident at the time they need to arrange their mortgage rather than the fact they may have a UK mortgage and then moved to Australia?

Any perspectives from those familiar with this topic would be really appreciated!! Many thanks

Hi there and welcome!  We (husband and I) came over on sponsored visas in 2011 to see what life in oz what’s like - as we were only on sponsored visas we rented out our UK house and put our car and possessions in storage just in case it didn’t work out or we could not get PR. We had to get permission from our mortgage provider to rent the property which was ok and and they provided a letter of consent - we then rented it out via an agent with no issues from the mortgage provider.

Our plan was to experience Oz for a year but we settled in and despite being made redundant a few times on our temporary visas, Lady Luck was with us and we got sponsored for permanent residency which we received in 2015. Also in 2015 we sold the uk house as we wanted to buy here in Sydney - we gave the tenants 2 months notice at the end of the lease saying we would not be renewing the lease as we were selling, our selling real estate agent arranged viewings when convenient with the tenant and we got an offer which we accepted. The tenants moved out at the end of the lease, we flew back, cleared all our stuff, shipped stuff to Oz and the sale went through without any hitches. We sent the money via a forex company to Oz and we then purchased a property here within weeks.

Please note if you do not have PR and want to purchase a house in Oz you will need FIRB approval and it costs a fair bit - if you do not have PR you are considered as a foreign investor. Also some banks won’t lend to non PR’s - I know this because we started looking for a house a couple of months before we got our PR but did everything by the book in case we found something so paid a lot for FIRB approval to buy as we were non residents at that time.

As for the uk house renting it out and selling it, we had no issues - even when it came out of the fixed period for the last year we owned it. If you are coming on a temporary visa I would highly recommend NOT selling the uk home until you have PR as it’s getting harder to get PR from temp visas. However if you are coming on a PR visa, I would keep the uk house for a year or two (if you can) just to make sure you love it here enough to give that up - we rented here for 5 years while keeping the uk house and it’s the best thing we did as we had the security in case we could not get PR but also while immersing ourselves in Australia we knew we could go back to our lives, house, car, belongings IF one of us could not settle.

thankfully it worked our well for both and we love it here - would not change anything or the way we did it!

all the best and good luck - feel free to reach out if you have more Q’s

:-)

 

Edited April 22, 2018 by DeeTowers
Typo

[Ken]

13 hours ago, GB1978 said:

Hi everyone, my wife and I have recently decided to trial a move to Perth next year and are now starting to get deep into planning. However before we get into some of the move specifics, I wanted to check on the impact of our move on my UK mortgage.

The fixed 5 year period for the mortgage on my current home is expiring in a couple of months and I am trying to arrange a new fixed rate deal, probably for 3 years. The intention would be to rent out this property from next year whilst we trial the Australia move and then potentially sell if we think we want to make a permanent move or return to have as our home again if we return. I have read a few things around mortgages of UK property on this forum and some of the complexities of being non resident and therefore just wanted to check something.

I did mention to my mortgage provider our potential plan to move abroad, and they said that I would have to apply for consent to let at the time but they did not see any particular issue with me being based in Australia for part of my mortgage period.

Therefore is the UK mortgage complexity that some people on this forum have referred to caused by the fact that they are a UK non resident at the time they need to arrange their mortgage rather than the fact they may have a UK mortgage and then moved to Australia?

Any perspectives from those familiar with this topic would be really appreciated!! Many thanks

Yes, the complexity is arranging a mortgage while an Australian resident and consequently subject to Australian Financial Services Rules on a property in the UK which is consequently subject to UK Financial Services Rules. Your lender can be fined by either administration if it (or its agent - your financial advisor) breaches the rules.

Your concern only needs to be whether or not your lender will give you permission to let. Different banks have different policies. For some it's no problem at all, others will want to formally convert it to a buy-to-let mortgage (at additional cost to you) and the remainder have a blanket ban on letting. Best to find out which camp your lender falls into before you sign up. There is always a risk of course that a bank that currently routinely allows consent to let will change its policies between now and when you need that consent - but better to take that gamble than bet on a bank that is routinely rejecting consent-to-let at the moment.

 If it is likely that you will sell the property after leaving the UK then make sure you read the advise on selling a UK property on Talking Tax: Ask Alan.

[GB1978]

Thanks DeeTowers and Ken for your responses and your reassurance around my situation. It's good to know that should be one less thing to worry about in the midst of lots of things to do in the coming months. Ken - appreciate your point about the fact that consent to let is at the lender's discretion and worth checking their general approach before getting locked in. Thanks Again!