In the United Kingdom there are some 250 lending institutions vying for domestic mortgage business. Expatriate borrowers will find no more than two dozen lenders willing to offer home loans, on UK property, on the same, or only slightly less attractive terms as those enjoyed by the UK domestic borrower. This stems from the blinkered view, of most lenders, that an overseas borrower is a riskier proposition than a UK resident - they do not want to have to "pursue debt overseas". This ignores statistics proving that expatriate lending has a superior persistency and lack of arrears record than UK lending. Also, loans tend to be at a lower loan to value, giving the borrower more risk and the lender less. In the unlikely event of a lender having to repossess an expatriate's property, they will probably take over an income producing asset, via the rental usually associated with expatriate loans.
International Mortgage Plans (IMP) have specialised in the expatriate marketplace for seventeen years and, in that time, have seen a handful of expat lenders "swell" to the aforementioned two dozen or so. So who are the main players and what are some of their strengths and weaknesses? Here is an A to Z based on IMP's experience of the marketplace. A synopsis of the actual lending terms of most of these lenders, are identified on the accompanying table.
Abbey. Known more generally as Abbey National, or, more unkindly in recent years, as "The Shabby". Their latest reincarnation is under the Spanish Bank, Santander's banner - hopefully, an experience of Spanish practices can put some reality into this organisation, who, not so long ago, boasted a significant UK mortgage market share. They were even bold enough to open offices aimed at expats in Hong Kong and Dubai but closed them during one of their frequent reorganisations. They are of little help to expat borrowers and are particularly obstructive to existing borrowers looking to extend their terms, or borrowing levels.
Bank of Scotland - Halifax. Part of the huge HBOS group and still keen to help the expatriate. Halifax, the H in HBOS, have obviously decided to leave this business to their friends North of the border and have now priced themselves out of the new loans' market and, like the Abbey, are ensuring that their old customers go elsewhere, rather than accommodate their ongoing needs.
Bank of Scotland maintain offices in Hong Kong and the Isle of Man, dedicated to helping expats and have particularly helpful senior personnel in these locations. Major plusses are for high percentage loans and flexible underwriting - lending terms are a little better than average.
Cheltenham & Gloucester. Another former building society who seem unable to make up their minds whether they want to be in the expatriate market or not. During their occasional periods of positive response, they seem intent on making life difficult for introducers and customers alike, with Dickensian underwriting and various stipulations regarding a necessity to repatriate to the UK within a finite period. Terms are good if qualification is achieved.
Exhibitions - Property - Caveat Emptor. Only attend one of these if you leave your wallet, credit cards and avarice at home. Do not buy property until it has been appraised and viewed by a professional and a sensible friend and/or relative. The problems of the Docklands, where values tumbled dramatically in the off-plan developments at the end of eighties, are showing some signs of being revisited in the off-plan developments now coming on stream in Britain's major cities, such as Manchester, Liverpool, Leeds and Bristol. Fundamentally, builders have over-supplied similar units and reports are rife that 10% - 20% discounts are commonplace.
Fortis. One of the Worlds largest banks but with a relatively low profile! Their offices, in London and Hong Kong, offer a second-to-none service to expatriates and foreign nationals. Their rates are slightly better than many of their bank competitors and they are extremely helpful where borrowing is required via special purchase vehicles, such as off-shore trusts and companies. They are very competitive for multi-currency loans. They have a high Minimum loan of £150,000. Fortis are competitive for multi currency loans and general lending terms are excellent.
Heritable Bank. Rather like Fortis, a true "niche lender", with first rate service and sensible underwriting. Personnel who actually know what they are doing. Whilst not having the sharpest rates in town, they are not far off the pace and there is plenty of add-on value to be had with this lender.
HSBC. Until recently, a "sleeping giant", it now has an aggressive stance on expatriate business, including mortgages on attractive terms. HSBC has the advantage of good people on the ground in most expatriate centres. On the downside, there seems to be a determination to run clients entire financial planning, with an emphasis on cross-selling of other bank insurance and investment products to justify the granting of facilities.
Lambeth Building Society. Who, you might say? Britain's twentieth largest mutual building society (there are some sixty still in existence). Lambeth are a new player, whose special terms are exclusively available via International Mortgage Plans. Lending terms, particularly rate, rank amongst the very best available. On the downside, there is still a slowness to understand what expatriate life is all about and to provide the requisite speed of service in loan processing. Recently subject to a merger with Portman Building Society.
Lloyds TSB. Very involved in the expatriate world via its overseas club and representation in all expatriate centres. Its offices in Hong Kong and Singapore are particularly active in expat mortgages. In its previous guise, as Hill Samuel, Lloyds in Hong Kong truly had the Asia market "by the throat" and there are indications of a drive, by this lender, to reachieve that pre-eminence. Average lending terms are countered by flexibility, currency options and the ability to offer terms in other countries other than just the UK.
Mortgage Brokers. They should be able to access the entire marketplace. They will certainly be remunerated by the lender, via a procuration fee and this could determine the arrangement fee they will almost certainly charge. This could be anywhere between £250 and 1-1.5% of the loan but a good broker should be able to save an applicant serious money and by handling the processing of the loan proposal avoid a lot of heartache in dealing with lenders who seem intent on employing sales prevention forces.
Preapproval essential. Whether you form that purchasing group intent on making the most of developers over supplied buy to let apartments or want to stake your claim in a rising "prime area" market an acceptance in principle from a lender is an essential planning tool. International Mortgage Plans (IMP) make no charge for this service but will put in place a preapproval facility to your maximum loan availability. Whilst a loan application is required the property details are left blank for later submission.
IMPs chosen lender will clear their status checks via proof of address, identity and provision of financial documentation. All this can be handled by IMP without cost. As a result the intending purchaser will receive a letter approving a loan subject to provision of acceptable property details .This can be given to the vendors or estate agent as evidence of the ability to complete a purchase quickly as just a valuation will complete the lenders file
Portman Building Society Britain's third larges building society and a major player in expatriate mortgages for fifteen years, offering very competitive rates, offset by very poor service levels. Policy changes in 2005 have led them to direct expatriate business where letting is an issue to their subsidiary The Mortgage Works. Commitments to existing are still honoured and their best domestic terms available to expats where the spouse occupies.
Royal Bank of Scotland Recently confirmed their new aggressive stance in the marketplace by the acquisition of Northern Bank, who have been a leading expat loan provider for some years. Royal Bank are also able to assist in overseas locations, particularly Singapore and Hong Kong. Broadly, their terms match those of the other large banks, such as Bank of Scotland and Lloyds.
Scotland. Several expat lenders, including Lambeth, Heritable and Stroud & Swindon, do not offer home loans in Scotland. This is due to the separate and differing Scottish legal system and some lenders' reluctance to get involved in a the differing system
Stroud & Swindon Building Society. Britain's 15th largest building society and another new lender on the block via exclusive deals available only via IMP. There rates are currently the best available but, like the Lambeth, they are taking time to provide a service standard sufficient for the needs of expatriates and offered by some of the bigger banks, who are more in tune with applicants' general financial planning needs.
The Mortgage Works. Portman's new subsidiary, formerly Sunbank. Their propositions are very much aimed at buy to let lending, including loans for expats. Whilst their rates are not the keenest, they do have a wide range of products and have shown themselves to be able to provide a quick service, provided applications meet their reasonable underwriting rules.
Websites. The expatriate homeowner buyer and borrower are newly empowered! They no longer have to rely on the sales pitch of the far away agent or developer and can consult specific websites, which will tell them the comparable sale prices of properties adjacent to that of their interest, environmental information, including the likelihood of flooding in the area of their interest. Here a few useful sites:
www.google.com For Mortgages there is no need to look further than Google, using the key words, expat mortgages, expatriate mortgages and expat buy to let.
www.nethouseprices.com This will let you know the sale prices property has achieved in the road that you are looking at. These prices are the actual figure paid as registered by the UK land registry.
www.homecheck.co.uk With a UK postcode the site will tell you about any environmental/pollution/flooding and subsidence risks to the property.
www.upmystreet.com is a useful agent's site to see what property is on the market.
Current expat mortgage rates
Expats wishing to compare their own loan package with what is currently available should click on IMP's website which gives an overview of the current marketplace, lenders comparable terms and incorporate a cost and commitment free 48 acceptance in principle.