A world of opportunities are opening up for people to live and work overseas as more workers are casting aside any misapprehensions of working in a new country.
Instead they are embracing new cultures and becoming increasingly adventurous in their employment and lifestyle choices. It is fair to say that people’s horizons are most certainly broadening as the world becomes a much smaller place.
Getting from A to B is becoming cheaper, faster and more convenient, especially with the ever-increasing amount of budget airlines serviced by a growing number of airports and locations.
Therefore it is little wonder that we are experiencing greater levels of inward and outward migration in the UK.
Stimulating our market
Every week we see headlines in the national press revolving around increasing immigration numbers into the UK but figures leaving the country are also rising as it becomes increasingly common for Brits to work and live overseas. These levels of migration are also helping to stimulate various elements in the UK mortgage market.
The overseas market is one area that an increasing number of brokers are looking into as perennial favourites such as Spain, Portugal and France continue to perform strongly as well as the new phase of up and coming East European and further flung destinations increasing in popularity.
Immigration is also playing an important role in the stimulation of the buy-to-let (BTL) sector with demand for rented accommodation being fuelled by greater immigration and fewer first-time buyers entering the market.
This is especially relevant for the Greater London area which is seeing vast numbers of low skilled migrant workers entering the lower paid end of the retail and leisure sectors, which means that renting is generally the only type of accommodation available to them.
However, we are also experiencing increasing numbers of professional and skilled workers entering the market who may be looking to buy within the UK and this is where an offshore mortgage may be the most appropriate product for their circumstances.
The UK financial markets, especially the large financial institutions based in London, are a hotbed of foreign nationals from all parts of the world, with other sectors such as the health service and the legal profession also experiencing an influx of a skilled overseas workforce.
Brokers should be aware that there is no shortage of clients attracted to offshore mortgages, and it is unlikely that there ever will be.
Novice offshore brokers can also take comfort in the fact that they will usually only be dealing with clients in one of three situations.
First, there are the British expatriates who live and work abroad but want to retain a position in the UK housing market – especially in recent years when house price gains have been spectacular and while the market is now cooling, demand remains strong.
Then there are the foreign nationals or ‘in-pats’ who have come to the UK to work for a limited time.
They may want to buy a property in the UK for the time they are posted here, so arranging a loan might make sense. In addition, it can sometimes be difficult for foreign nationals to meet the stringent credit criteria required by lenders in the UK.
This is due to the fact that they may not have a detailed credit history and employment accounts. Also, they may not be on the electoral roll.
Finally, at the very top of the financial tree, there are wealthy foreign investors buying property in lucrative central London.
These could be very high net worth individuals from the world of entertainment, those who have set up businesses, contractors or self-employed, all of whom are highly skilled and in great demand with high earning potential. Clients like these can spend millions of pounds on one property.
Such people may possess the appetite for buying homes in the UK but for different reasons may find that an onshore UK lender would not look favourably on their application.
They may view the matter as being too complex and may not have the necessary systems and processes in place to satisfy their lending requirements.
The international element
UK mortgage brokers have not always considered the natural ‘international element’ of the service they can offer, but it is certainly worth investigating.
Traditionally, brokers that have been involved in the offshore mortgage market are from the big London-based brokerages, although there is no real reason why other firms cannot be involved.
In the past, those intermediaries who have expatriate clients, for example, have often referred them onto ‘specialists’. However working in conjunction with a lender to help them through the offshore mortgage transaction process can enable brokers to go it alone.
However, advisers must be aware that each offshore mortgage should be treated on an individual basis. It is imperative to make sure that the tax advice is correct at the beginning of the advice process, otherwise there could be a number of implications further down the line.
It is recommended that you develop a strong relationship with a tax expert, as there are a variety of tax rules for each country and individual circumstances to consider.
Increasingly lucrative
It is beneficial for all parties involved to invest time and energy into intermediaries looking at this market.
The more experience they gain, the more opportunities they see. As the majority of purchases are generally of a large value, this is proving to be an increasingly lucrative area for brokers.
In the past few years, the market has witnessed a shift towards smaller brokers introducing offshore loan business and as they become increasingly aware of the opportunities available there is little reason to be intimidated.
Having said that, there are still large gaps to be filled and all that remains is for more mortgage intermediaries to come and claim their share of this growing and increasingly transparent market in time for the year ahead.
It is a niche market but it is one that with the right lending partners will prove lucrative for any broker willing to put in the work and market themselves to their ‘international’ clients.
