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You are here: Home Housing Buying Is it time to fix your expat UK Mortgage Rate?

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22/02/2011Is it time to fix your expat UK Mortgage Rate?

Is it time to fix your expat UK Mortgage Rate? There is evidence that a number of lenders are tightening the screws on expats with UK mortgages. But there is a ray of hope.

People with expat mortgages on UK property have long felt like the poor relations when it comes to dealing with lenders – and things could be about to get a whole lot worse. So is this the time to look around for a longer term fixed rate on UK property?

As anyone who has ever applied for an expat UK mortgage will know from bitter experience, these can be hard to come by, to say the least. Banks regard applicants as a bigger risk than residents with UK property and cite the difficulty of pursuing mortgage defaulters overseas as justification for the higher interest rates they charge for this kind of UK home loan.

As if this wasn’t bad enough, certain lenders (for example, Nationwide) have recently begun loading existing customers’ mortgage rates for UK properties by up to 1.5% p.a. once their fixed-rate periods expire. Lenders are realising that the borrower is living overseas and have UK property to let. In many cases this can make it uneconomic to rent out the property in question, particularly if it means that the mortgage repayments become greater than the rental income being received.


UK Base Rate rises loom

Add to this the fact that, following the January’s announcement that UK inflation is currently running at 3.7% there is a very real chance that the Bank of England will react by raising its base rate. If this happens, an even more worrying outlook emerges for expat mortgage holders looking to safeguard their assets back in the UK.

In fact, according to statement made in an interview with the Daily Telegraph on 22 December 2010 by Paul Fisher in his capacity as executive director of markets and member of the Bank’s Monetary Policy Committee, the rise could be dramatic.

Mr Fisher claimed that in order to “normalise” rates it could be raised ten-fold in 2011 to 5%. He went on to say that this rise was likely to happen early in 2011. If it does, it will mean that people would find that higher UK mortgage rates will mean they’re spending more of their disposable income on debt interest than they have in 20 years.

Another member of the Bank of England’s Monetary Policy Committee, Andrew Sentance, was quoted in the Daily Telegraph on 27 November 2010 as saying the reason for any possible base rate rise could be concern about inflation rate.

There is evidence that a number of lenders are tightening the screw on expats with UK mortgages. The economic outlook can only mean that the situation is set to get worse.

But even though it may all seem like doom and gloom, there is a ray of hope.

Looking on the bright side, some of the more enlightened lenders are introducing expat UK mortgages which are more than competitive. For example one of the big lenders is currently offering a fixed rate mortgage of 4.05% for a 5 year period. Another is offering an even lower tracker rate of 1.99% above UK base rate for 2 years. Generally speaking, the lower loan to value re-mortgage attracts the more competitive rate.

Alternatively, you can obtain a 5-year fixed-rate mortgage for a Buy to Let UK purchase at 5.49% at 80% loan to value.

Great deals are out there if you know where to look and this could be the right time to re-mortgage. But fast action is recommended because if the Bank of England rate does rise, there’s no telling how quickly lenders’ rates for expat mortgages will follow suit.

Liquid Expat Mortgages strives to simplify the process of raising finance whilst providing the largest choice of available mortgage products and lenders that are totally familiar with expat lending requirements and circumstances. Its clients have used its services to access UK and Overseas mortgage lenders for amounts ranging from £50k to over £5m to purchase Buy to Let, Investment Property, Main UK and Overseas Residences. Liquid Expat Mortgages can provide access to over 40 different lenders who are willing to accept applications from British Expatriates and Foreign Nationals looking for UK and Overseas Mortgages. For more information, contact Stuart Marshall.



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