Property Finance – Repayment or Interest Only Property Finance

image repayment or int onlyA number of our clients are first time Buy to Let Landlords or even accidental landlords who have applied for permission to rent their previous home out, whilst they are overseas.

No matter what your situation, as an expatriate property owner the repayment or interest only finance question is an important one, however take heed that some of the choice has now been removed.

Interest only mortgages are still available through some banks, to UK property purchasers, to purchase their own home, or their next home.

However, the rates are onerous, the deposits are high, 50% in some cases, and the stringent testing on how you intend to repay the loan at the end of the term is becoming harder and harder to satisfy.

If you find yourself coming to the end of a Fixed Term on a residential interest only mortgage, be ready, to be asked to pay a significantly increased interest rate or to move lenders.

Finding a new lender, for an interest only loan, will prove to be a challenge if you do not have 50% equity in your home and therefore to maintain this property as your UK base, a repayment loan may be your only choice.

But note: a number of interest only lenders will not accept an application if you are not currently UK resident.See Interest Only Lenders

For Buy to Let investors, whether this be a conversion of your previous home to an investment property or a new property, interest only mortgages remain available.

This is due to this loan type being excluded from the Mortgage Market Review regulations. These new regulations cover mortgages where you use your own home as security for the loan, but not buy-to-let mortgages or second mortgages.The Mortgage Market Review.

The number of willing lenders is low in comparison to UK resident lending, the terms can vary significantly and the deposits are high.

Typical terms for interest only mortgage for an expatriate borrower will have relatively high fees, both administrative and arrangement. There will be minimum loan amounts, minimum property purchase amounts, and restrictions on property type, age or condition… Take advice from a specialized Broker or Bank to ensure you have all of the facts before making the decision on the lender as well as the loan type.

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