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What costs should you consider when buying an expat property?

Use an expat mortgage broker to get lower rates

Buying a property overseas and securing an expat mortgage can be a daunting process. With many things to consider, including expat mortgage rates, conveyancing costs and the costs of running a home. Having an expat mortgage broker on hand to advise on deposits and rates can make all the difference. Especially when there are so many costs to consider when purchasing a new home. Below we’ve listed some of the expected costs when buying an expat property.  

What expat mortgages are available? 

For expats purchasing a property in the UK, there are two types of expat mortgages available: 

Residential Mortgages 

  • Residential expat mortgages are perfect for those overseas but wish to buy a property for yourself on return, or for your UK based family. 

Buy To Let Mortgages 

  • If residential isn’t quite a good fit, or you wish to buy for investment purposes, then a buy to let expat mortgage will be a good option. 

Your expat mortgage broker will be able to help you with which mortgage will be most suitable. 

What deposit do you need for an expat mortgage? 

For a Buy to Let Expat mortgage, UK expats can be expected to have a minimum deposit of 25%. For UK Expat Residential Mortgage, the minimum deposit is 20%

What do you need to know about expat mortgage rates? 

Once you've decided on the type of expat mortgage you need, your UK mortgage broker will be able to go through mortgage rates and deposits. It’s then that they’ll be able to find the one most suitable to your circumstances. 

How to get lower expat mortgage rates? 

Mortgage interest rates fluctuate all the time, and for expats returning to the UK there are lower mortgage rates offered. However, compared to domestic mortgage rates, expat mortgages do have higher rates.  

To get the lowest expat mortgage rate, you should try to have: 

  • A traceable credit score 
  • A UK bank account 
  • A big deposit, and at least over 25% LTV (loan-to-value)  
  • Proof of income streams 

Meeting the above will put you in the best position to acquire lower expat mortgage rates.  

What interest rate types are there? 

Depending on your circumstances, and the mortgage advisor’s recommendations, you can pay your mortgage on variable rate or fixed rates, With the current rate hikes, clients are opting to fix their mortgage payments so that they have the certainty and stability that monthly payments will not change.     

Additional upfront costs on your UK property 

There are two types to consider when it comes to the costs incurred from purchasing a UK property as an expat. One being the upfront costs which are only paid once, and we've broken these costs down below. 

Solicitor Fees 

A solicitor is an integral part of the house buying process. They're responsible for all the legal work involved in buying, selling, and mortgaging your UK property. There is more paperwork to consider as a UK expat, but an expert expat solicitor will be able to help with any questions. Solicitors can also assist in adding a name or removing a name on a mortgage. 

Valuation fees 

Once your offer is accepted, your mortgage broker will liaise between the lender and yourself to progress with your mortgage application. At this stage, the lender will need to carry out a valuation to help assess the UK property against their lending criteria. 

Land Registry fees 

Land registry fees is a cost paid once and is paid to the UK government to transfer the legal deeds to you as the new owner. 

Home and Contents Insurance 

Before you complete your purchase, it’s important to have home insurance in place. This protects you, but it also protects your investment when purchasing your expat UK property. Your broker can assist you with purchasing this, ensuring you have the best protection for your property.  

Be aware to inquire about this before the exchange stage, so this is in place for completion. 

Stamp Duty 

In the UK, all properties purchased over £125,000 will incur a stamp duty tax. This rate is usually between 2-12% depending on your status, being either a first-time buyer, home mover or if you currently own another property as a holiday home or as a buy to Let and wish to purchase another one. There is also an additional 2% charge on top of this for expat properties. The charges increase the more properties you have; therefore, it is recommended that clarification is sought from your solicitor regarding stamp duty legislation and how much to tax to pay. 

Removal Company 

Whether you’re moving back to the UK or setting your expat property up for your UK family, you may want a removal company to do all the heavy lifting. For a certain price, removal companies can even box up your items and move them to your new home. 

Ongoing costs to pay on your UK expat property 

The second costs to plan for is ongoing costs, which are paid regularly, and includes bills. We’ve listed some of these below: 

Bills 

Bills are an ongoing cost when purchasing a property with everything from gas and electric, council tax, water and a tv licence, if required, all needing to be paid. This cost can be spread out into monthly or yearly payments. It’s worth being aware that these prices can increase and decrease year-by-year. 

Leaseholder Fees 

If the UK property you've purchased is a leasehold property, you will be required to pay for ground rent. 

Mortgage Repayments 

Whether you’re on a variable or fixed rate, all UK homeowners will be required to make monthly mortgage repayments. For the best saving, it's recommended to fix your mortgage to limit the effects of variable rates and ensure you can budget adequately for this payment. Missing a mortgage payment may lead to your home being repossessed. 

Maintenance and Repairs 

Owning a home comes with its own necessary maintenance and repairs. While you may be lucky to avoid these costs immediately, it's best to begin saving in case of any surprises. Other maintenance costs to keep in mind include a boiler service to ensure it's working effectively. The overall figure for repairs and maintenance can range, but being aware of the cost and planning for it can make all the difference.   

Why Fidelius deVere Mortgages?  

It can be tiring looking for a mortgage broker who will have your best interest at heart. At Fidelius deVere Mortgages, our independent expat mortgage brokers will take away the worry, while getting you the best expat mortgage rates.  

With over two decades of experience in expat mortgages, our specialised experts will source the best lender for your UK expat property. Aiming to make the process of acquiring the best rate as easy as possible.  

Get in touch today with one of our expat mortgages brokers to discuss further.   

Your home may be repossessed if you do not keep up on your mortgage repayments.  

Posted by Barney - Purpose Media on June 22nd 2022

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