BTL mortgage for a retired expat

Hi Adam

Sorry to take a while to publish this, we have been overwhelmed with Readers Questions just recently.

From what you have said the deal sounds doable, the rates will depend on a more detailed overview of his circumstances and requirements for which I need a bit more information in order to be able to get you a decision in principle please.

1) How old is your client?

2) Where does he reside?

3) Other than the £35,000 rental income does he has any other provable income and if so how much and what is the source, e.g. former UK employers pension scheme?

4) Does the £1 million house in Surrey have any finance secured against it?

5) What is the purchase price and estimated rental value of each of the flats he's looking to buy?

I look forward to your reply.

Reply to the comment left by "Mark Alexander" at "16/02/2014 - 09:43":

Hi Mark, in answer to your questions.

1. He's 72
2. Living in Spain for the past 8 years.
3. He previously ran his own construction company in the UK. Not sure of the values but I think he has various pensions, savings, shares etc.
4. Nothing outstanding on the surrey house. Rental income £35k p..a
5. With £400k cash he would buy 2 x £200k flats with yields of c.5% but if he can raise finance through equity release etc he would like to increase the purchase prices but does definitely not want to over-stretch.
6. Ideally he wants to buy each flat in the name of his 2 children i.e. 1 each.

Thanks for your help. Adam

If he bought two flats with finance on each one, would this create a more difficult situation for his children should he pass away?
They would inherit, but during the time things were being sorted out, might the assets be frozen and the mortgage not get paid if they were in his childrens' names?

Could he raise equity (equity release perhaps) from his surrey property to use to 'top up' his cash reserve and therefore still buy for cash?

Note: I am not an advisor, these are purely my personal thoughts..

Reply to the comment left by "Adam Lewczynski" at "16/02/2014 - 22:29":

Hi Adam

Equity release is a very specialist and highly regulated form of finance. Your client could probably do with some professional guidance on IHT planning too.

May I pass your email over to one of my recommended contacts please so that you may make direct contact with each other please?

No fee by the way 🙂
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Hi Mark and Adam
a few days ago and equity release on a rental property would not have been a problem, and might have been a good solution for your client. However that product has just been withdrawn, but if your client can wait another month or two I understand the product should be returning.

Adam, ping me your contact details and the moment the product re-emerges I'll contact you.
Garry Streeter

Reply to the comment left by "Garry Streeter" at "17/02/2014 - 10:40":

Hi Garry

In the meantime, what are the alternatives for a 72 year old expat?

To the layman, equity release and releasing equity may often mean the same thing. Perhaps the interest roll up isn't what he wanted anyway, especially if there are cheaper deals available on a more traditional mortgage basis?
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Reply to the comment left by "Mark Alexander" at "17/02/2014 - 10:46":

Mark

you are quite right when you point out that the differences between equity release (ER) and releasing equity are now somewhat blurred.
ER in the main still relates to releasing cash from a main residence only for those aged 65+, but it now starts at 55 and can now also apply to rental or 2nd properties.More over ER can be interest only, "roll-up" mortgage or reversion plan (selling) but ALL are for life arrangements

Releasing equity is essentially a remortgage or 2nd mortgage of any property for adult of any age and will involve an interest only or capital repayment mortgage for a set term.

To determine current alternatives for an expat he/she would be best served by talking to a traditional mortgage and buy to let EXPERT such as Simone Gilks at Beauwater. My own expertise lies with equity release.

Hope that helps?

Reply to the comment left by "Garry Streeter" at "17/02/2014 - 11:20":

Hi Garry

I agree, my plan was always to to refer Adam to our sponsors who are best qualified to advise on this.

These being:-

Simone Gilks of Beauwater - member profile here >>> http://www.property118.com/member/?id=1786

and

Howard Reuben at HD Consultants - member profile here >>> http://www.property118.com/member/?id=314

and may the best man (or woman) win the business 🙂

Of course I appreciate that you are the Equity Release specialist in Simone's team and I'm sure Howard also has at least one specialist too.

NOTE FOR ADAM - we refer dozens of Property118 readers to these two firms every month and feedback is always incredibly positive.
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Hi Adam

The choice for your Client is extremely limited as only a very small handful of lenders would consider lending to a retired expat.

The reasons are fundamentally because of the residency rules governing lending to people who live in foreign territories as there are various restrictive rules across financial regulators in different countries.

Professional Financial Advisers are governed by the FCA rules in cases like this which are known as 'passporting' and so whereas your Client may possibly be able to 'shop online' and get a non regulated product, this may detrimental to his tax and financial position if professional advice was not sought in the first place.

Having spoken to a number of possible lenders for your Client before I posted a comment on here, the options were filtered down to just one lender who would be interested to assess this further, however the fundamental issue now is whether or not he has had a UK mortgage in his name in the past 3 years.

If not, there may not be many options open to him.

This is a real simple overview though as all information above is strictly NOT advice, because of course advice can only be provided and options formally recommended following a 'fact find' between the Adviser and the Client directly.

In summary; there can be no specific appropriate answers written to your Client on an open forum like this unless the Adviser is fully informed of all relevant personal and financial background details in the first place.

Hope this helps.

Howard

http://www.hdconsultants.net/awards

Hi Adam

It has just occurred to me, what exactly is your client trying to achieve?

Why would he want to take on additional debt at his age in order to buy investment properties for his children when he already has a £1 million asset sitting there with no mortgage?

Why doesn't he just gift a beneficial interest in the property in Surrey to each of his children instead of acquiring more properties? The children could use that beneficial interest as security if they need to raise money.

If he needs tax and legal advice on that I'd recommend Neil Barlow at Pacific Limited - see >>> http://www.property118.com/member/?id=452
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