- Client: Italian national who was non-domiciled and non-resident in the UK, with international employment and income
- Property: London residential property valued at £2.8 million
- Challenge: Required a high 70% LTV despite non-resident status, foreign currency income and a complex income structure
- Finance: £1.96 million mortgage at 70% LTV on a three-year discounted variable rate over a 16-year term
London continues to attract international clients looking to acquire residential property for use when visiting the UK. However, arranging mortgage finance can become more complex where a borrower is both non-domiciled and non-resident, particularly when their income is generated overseas and denominated in a foreign currency.
Enness was approached by an Italian national who was non-domiciled and non-resident in the UK but spent a significant amount of time in London for business. The client was looking to acquire a London property valued at approximately £2.8 million and required mortgage funding at 70% loan to value (LTV).
The client was employed by, and held a substantial shareholding in, a global financial business. Their income structure was relatively complex and was primarily denominated in euros. This presented an additional consideration for lenders, particularly where the client had no permanent UK residency and intended to use the property regularly while working in London rather than as their primary residence.
The required 70% LTV also represented a relatively high level of borrowing for a non-resident client with overseas income. Many lenders would typically apply more restrictive criteria in these circumstances, while others may impose pricing premiums or require a private banking relationship.
Enness therefore needed to identify a lender that could take a pragmatic view of the client’s circumstances while still offering competitive terms. Rather than attempting to assess every element of the client’s international income structure, the application was simplified by focusing on the client’s salary from the global financial business.
The salary figures were supported by an accountant’s reference, providing the lender with a clear and independently verified source of income. This allowed the application to be presented in a straightforward manner while avoiding unnecessary complications around the client’s wider international income arrangements.
Following discussions with a number of lenders, Enness secured finance through a flexible UK building society rather than a private bank or specialist lender. The lender was prepared to consider the client’s referenced income and international circumstances while accommodating the proposed LTV.
The resulting mortgage provided £1.96 million of funding against the £2.8 million property, representing 70% LTV. The facility was arranged on a three-year discounted variable rate of 2.99% over a 16-year term at the time.
The case demonstrates how UK mortgage finance can be structured for non-resident international borrowers where income is earned overseas and the property will not be their permanent residence. The right lender may be able to consider a clearly evidenced primary income stream rather than requiring every element of a complex international financial structure to be assessed.
For international clients seeking to acquire high-value residential property in the UK, specialist private bank mortgage expertise can help identify suitable lenders and structure applications around complex residency, income and asset profiles, subject to individual circumstances and lender criteria.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, valuation, property suitability and lender criteria. Terms, rates, LTVs, fees and availability may vary depending on individual circumstances.
Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise. Where income is earned in a foreign currency, exchange-rate movements may affect affordability and the cost of servicing borrowing. Variable-rate mortgages may also result in repayments increasing if the applicable interest rate rises.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
