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Getting a Jersey Mortgage? Here's What You Should Know

19th Aug 22
Getting a Jersey Mortgage? Here's What You Should Know

Although Jersey is part of the British Isles, there are significant distinctions in the mortgage system from the UK. To take advantage of a Jersey mortgage, you must be aware of the distinctions and how you can take advantage of financing a Jersey property purchase with a mortgage. 

Tax Relief

The main difference between UK and Jersey mortgages is that Jersey continues to allow resident borrowers to claim a tax deduction on the interest rate associated with a Jersey mortgage. The UK’s mortgage interest tax relief system has already been fully phased out. However, the current system will remain in place in Jersey until 2025. So the amount of tax relief you can claim will continue to reduce year-on-year until 2025 before it drops to zero as of 2026.

To take advantage of the tax relief on a Jersey mortgage, the property you buy on the island must be your primary residence. Therefore, you must either be planning to live in it (in the case of a property you are buying), or you currently live in it and are taking out a mortgage to extend the property in some way (i.e., adding a floor, adding a garage etc.)

Jersey Mortgage Base Rate

Base rates are linked to Bank of England rates, and Jersey mortgages are regulated similarly to the UK mortgage sector. The fact that Jersey mortgages are valued in sterling removes the currency exchange risk for many international investors. 

Some of the key facts concerning property finance in Jersey are as follows:

  • UK lenders will consider Jersey mortgages as international mortgages, although they are valued in sterling and are linked to the UK’s base rate. 

  • There is a limit to the level of mortgage tax relief available (which is also subject to change).

  • Buy-to-let mortgages in Jersey may be subject to housing qualifications and individual status.

  • Jersey-registered businesses are exempt from local taxes. As a result, commercial property mortgages are prevalent.

  • Stamp duty and land transaction tax are applicable, but there are concessions for first-time buyers. 

Rates and Lenders

Rates for Jersey home loans can start at around 1.5%, although what a lender will let you borrow will depend on your circumstances.

Mainstream local lenders tend to offer loan-to-value rations similar to those offered by high street banks and lenders in the UK. However, if you are a high-net-worth individual, Enness will be able to approach any of the lenders active in the Jersey mortgage market that are likely to offer the best rates. Usually, this will include approaching and negotiating with local and international private banks to find the best deal. However, we can also arrange mortgages with an array of alternative and niche lenders.

Lenders continue to offer very competitive rates for Jersey mortgages. Still, in the context of recent base rate increases away from historic lows, it is always worth working with a broker who can negotiate and access as many lenders as possible to search for the best rates and terms for you.

Lenders can offer quite different rates and terms for a Jersey mortgage. However, understanding the subtle differences between each offer and knowing which is most advantageous can be less straightforward than you might think. Enness will source the most competitive rates and terms for you from our network of lenders and help you compare differences between them so you can make an informed choice of the offer that puts you in the best position when buying a house in Jersey.