The UK has always been a popular location for international buyers, from long term investors to individuals seeking a home to enjoy with their family and friends while visiting London and beyond.
Unsurprisingly, buyer activity shrunk considerably in 2020. With travel mostly prohibited and the ongoing Covid situation so uncertain, opportunities for international buyers to visit and make purchases have been extremely limited.
But as the Articus Finance team has witnessed first hand, the restrictions of the last 18 months have by no means diminished the interest of potential buyers. As the world opens back up, overseas investors are flooding back. And if the UK continues on its current course without Covid restrictions, we expect to see significant bounceback over the next two years, both in terms of buyer appetite and price growth.
Of course, finding a property is only the first step. After this, prospective buyers must also think about how they pay for the property. So – if you are an international investor looking to purchase property in the UK, what’s the route forward?
Should you buy in cash, or secure a mortgage for a UK property?
For HNW individuals who can afford to buy in cash, this may seem like the easiest route forward – particularly for those who wish to avoid the hassle of arranging a mortgage from abroad. Some overseas buyers even believe that they have to purchase property in cash, as they think lenders will not issue a mortgage for a UK property to a non-UK resident. And some want to pay in cash because they believe it will help their property purchase move quickly.
All of these things can be true. However, the reality is that the benefits of buying a UK property with a mortgage far outweigh any potential administrative difficulties, particularly if you employ the services of a specialist mortgage broker.
What are the benefits of buying a UK property with a mortgage?
There are several benefits to buying a UK property with a mortgage. Mortgages have always been one of the cheapest ways to borrow, and with the Bank of England base rate so low, rates have never been more favourable, even for international investors.
This means it’s possible even for overseas investors to secure mortgage borrowing at a very low cost – in turn making the current moment a great opportunity for overseas buyers to lock in an excellent deal.
The second major benefit is that arranging a mortgage for a UK property allows overseas buyers to maintain their liquidity, rather than tying up large sums of capital in property. As we’ve all seen in the last two years, unexpected events can hit the economy at any time. Financial flexibility is paramount, so using a mortgage to maintain as much liquidity as possible is therefore a sensible route forward for all buyers.
This is particularly relevant if you want to maintain cash reserves to carry out refurbishment, or if you are an investor looking to expand a portfolio of investments across the UK. By buying a property with a mortgage, you can then go on to split your capital across several properties, ultimately aiming to enjoy capital growth across them all.
Overcoming the challenges of arranging a mortgage from overseas
The benefits are clear – but there are some challenges to be aware of. The first is finding the appropriate lender, as some banks are unwilling to lend to foreign nationals or those living abroad. The second is the logistical headache of arranging a mortgage from abroad, as this can be an admin-heavy process.
Fortunately, it’s easy to overcome both of these issues with the help of an experienced broker like Articus. We assist international clients in buying UK property day-in, day-out, so we always have a clear picture of which lenders to place your case with.
Our experience working with HNW individuals means we know how to remove the hassle from the process – leaving you free to focus your time elsewhere. We can help you move quickly and with minimal fuss, negotiating with the appropriate lender to secure you the best possible terms.
An opportune moment for UK property investment
As travel opens up and the UK’s high-value property market comes back to life, overseas investors in the UK have a real opportunity to secure bargains in some of the country’s most desirable locations. The window of opportunity may be short, as we expect increased activity to drive up prices within a matter of years – but for now, there are some fantastic possibilities on the table.
Buying these properties with the help of the right mortgage – and in turn, the right mortgage broker – can make the process seamless. Speak to an Articus broker today to discuss your possibilities.
Seeking more information on securing a UK mortgage from overseas? Download our expat and foreign national mortgage guide.
