Even the idea of applying for a mortgage as an expat can be daunting! However, if you find your dream home this summer, here are some steps to (hopefully) help make it yours by Keren Bobker, Senior Partner and Independent Financial Adviser at Holborn Assets LLC and writer of the popular financial blog www.financialuae.com.

No matter what is happening in the rest of the world, interest in the UK housing market remains strong with many people looking to buy a property as part of their portfolio of investments, or as a future home.

For expats, it is harder to obtain a UK mortgage than for UK residents but I have an excellent in-house mortgage department with the largest panel of lenders of any broker in the Middle East and we focus on assisting expats buying property in both the UK and the UAE.

This article is a guide to what you need to know when buying property in the UK and how to obtain a mortgage.

Plan ahead

It is a good idea to get a mortgage agreement early on as once a property is found the process can move very quickly. Some vendors won’t confirm an offer until you can demonstrate you are genuinely in a position to proceed and you don’t want to be put under pressure or beaten to a property as the other buyers have an agreement already in place.

How much can I borrow?

For any expat, the maximum loan to value for a UK mortgage is 75% of the purchase price or value, whichever is lower. The amount expats can borrow has recently reduced so we can now borrow as little as £30,000 on a purchase price of £80,000 although the mortgage options are limited at this level. For anyone borrowing £100,000 on a purchase price of £150,000 or more, there are more lenders in the market.

The actual amount you can borrow is calculated based on income, both earned and any rental income, plus any existing liabilities.

Obtaining an Agreement in Principle

The first step is to clarify what you can afford to borrow and then establish which mortgage product is most suitable for you.

We then gather all the relevant documents such as proof of income, copies of bank statements and do a standard compliance check. We then obtain an Agreement in Principle from a lender, which unusually takes three to five days and then you are in a position to find a property in the knowledge you can proceed quickly. This puts you in a better negotiating position.

The valuation

Once you have found a property and agreed on a purchase price, or if you just want to remortgage your existing property, all lenders will require a valuation to establish that the property is worth the purchase price or that there is sufficient equity to support a remortgage.

Note that this is a basic valuation for the benefit of the lender and whilst they may pick up on any major issues with the property it is still wise to pay for a proper survey for your own peace of mind.

The mortgage offer

Once the valuation report as been received and the bank is happy to lend on the property then final approval is given on the mortgage. This will usually take five to 10 days if all requirements have been met.

The offer letter will contain all the terms and conditions pertaining to a mortgage and you should read it carefully. We will check it on your behalf and explain anything that may be unclear.

Conveyancing

This is the term used to describe the legal process of transferring the legal title of a property, so essentially ownership, from one party to another. You should engage a solicitor early in the process and they will now receive documents from the mortgage lender.

The solicitor will carry out local authority searches, liaise with the vendor’s solicitor, handle the deposit and ensure all legal obligations are met before arranging the exchange of contracts. This is the vendor’s agreement to sell and the purchaser’s agreement to buy and is the point of no return. Completion of the purchase usually takes place a few weeks afterwards.

Fees and charges

In addition to the valuation fee mentioned earlier there are a number of others charges. The lender will have an arrangement fee usually between 0.5% and 1% of the loan amount and there are legal fees for the solicitor. This will vary and it can be worth shopping around but you can expect to pay between £1,200 to £1,800.  UK Stamp Duty is also payable on purchase or change of title, or the Land and Buildings Transaction Tax in Scotland. For the purchase of a first property the standard rates may apply but for second and subsequent properties this will be charged at the higher rates introduced in April 2016.

As expert mortgage brokers, we charge a fee for our professional services. This can vary but will start at 0.75% of the amount borrowed. Not only do we have a wide range of lenders, some of whom do not take direct applications, we often have access to special deals and get applications agreed that fall outside standard criteria due to our connections. We will make the process easier by liaising with lenders, solicitors, agents and generally holding your hand throughout.

Other considerations

If the property is to be let you will need someone to manage it and most people will pay a letting agent who may also collect the rent. They will usually charge between 5% and 12% of the rental income depending on the service but are no longer permitted to charge additional fees on top of that. As a non-resident landlord, the rental income can usually be paid gross but you need to keep proper records of both income and costs.

Whilst not all UK lenders insist that life cover be arranged it is sensible to have at least a basic policy in place and I can arrange suitable cover.

If you do not already have a UK or Sterling bank account, and the relevant lender does not provide this facility, I can assist in arranging an offshore bank account which will be required to make the mortgage payment and receive the rental income.

Further information on the various taxes related to UK property can be found here: Need to know: Taxes on UK property

Finding a property for investment can be times consuming so if you do not want to go to the trouble of doing this yourself, I deal with a couple of companies that source developments for investors, so please ask for an introduction.

 Keren also writes the weekly On Your Side column in The National newspaper. Well qualified and experienced she offers a full personal financial planning service and can be contacted at keren@holbornassets.com. If you would like advice on arranging a mortgage, or have any queries about any aspect of personal financial planning please contact her at keren@holbornassets.com