An expat living in South Africa wanted to see how much she could borrow to purchase a buy to let property in Oxford. She wanted to ensure she could finance the buy to let property before sourcing it and was looking in the region of a £500,000 purchase price. This fell under the category of expat finance for an older borrower.
The client lived in Cape Town, where she had her main residence; estimated worth £2 million and unencumbered. She also owns a buy to let unencumbered property in Chelsea worth approximately £3 million and generating £70,000 rent per year. The client has a pension worth £400,000 in the background and a limited cash supply of approximately £100,000.
Requiring ex pat finance for an older borrower, at 70 years old, the client had limited income other than from her rental property. She was self-employed as a photographer however this was not a steady income stream which is often what lenders are looking for to make them comfortable with a loan.
The client’s husband had another investment property in South Africa worth £450,000 and is employed with an income, however, he was not to be party to the proposed mortgage.
The main challenges with this scenario of ex-pat finance for an older borrower is the limited income was not what is typically considered sufficient to support this level of borrowing.
I contacted numerous lenders, mainly building societies, to see if they could arrange this ex-pat finance for an older borrower for the longest term available and ideally interest only.
One particular lender is receptive to older borrowers who can prove they have assets in the background and as long as the mortgage remains within their loan-to-value (LTV) ratio. I persuaded them to consider leveraging the unencumbered rental property in Chelsea and releasing cash for the purchase in Oxford.
We settled on a 15 year facility with a variable interest rate of 4.99% on an interest only basis for the entire term. I also referred the case to Enness Wealth who reviewed the £400,000 worth of pensions in the United Kingdom, assisted the client with building insurance on the new purchase and from reviewing the existing policy on the buy to let property in Chelsea saved the client significant money per annum.
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