The UK’s flourishing property market has long attracted foreign investors from around the world, and Monaco’s residents are no exception. Buy-to-let property is often the most sought-after type of purchase, given the potential for generating solid income from rentals, as well as the possibility of holding an appreciating asset that you can go on to sell.
There are few restrictions on UK mortgages and foreign nationals buying property in the UK. Monaco’s residents (regardless of your nationality) are usually able to secure non-resident buy-to-let mortgages with relative ease. However, the process can be time-consuming and complex to handle, particularly if you are trying to coordinate and negotiate finance from Monaco.
For first-time UK buy-to-let buyers, it’s helpful to understand the overarching lending products available. The majority of buy-to-let mortgages in the UK are 'unregulated' mortgages. Unregulated mortgages are available to buyers who do not intend to reside in the property or rent it to a family member. The vast majority of UK buy-to-let mortgages for Monaco residents are unregulated – this is important when it comes to understanding affordability rules and how much you can borrow.
You will generally use a regulated mortgage when you want to finance buy-to-let property you plan to live in in the future, or you will rent or make it available to a family member. While less common, these mortgages are often used by Monégasque buyers who want to live in the UK permanently in the future or provide care or support for a family member who lives in the UK.
In most cases, if you are buying a property that you plan to rent out to generate income, you will most likely want to utilise your rental income to pay off the mortgage. This is a widely accepted practice, but it’s important to know upfront that lenders will want to see that the income you generate from the property rental is significantly more than your mortgage repayments.
The projected amount your lender will want you to generate in rental income will need to be significantly more than the mortgage. The excess required (usually calculated as a percentage) will vary from lender to lender, but you will usually need to cover the mortgage by at least 110%, but 150% is increasingly common. Understanding how lenders will calculate the excess and what that means you will be able to afford can often be confusing – especially if it's your first time buying in the UK. Enness can explain more about what this looks like and help you understand how lenders will calculate the excess.
Lenders will always analyse Monaco residents buying UK buy-to-let property extremely carefully, even if you have a significant net worth. As long as you can comfortably afford the UK mortgage, this analysis is unlikely to limit what you can afford to buy and what you will be offered in terms of how much you can borrow. That said, lenders – especially those based in the UK – will approach non-resident borrowers with more caution.
Living in Monaco is invariably more expensive than the UK, given that the cost of living is so much higher. While some lenders (international private banks in particular) will be very used to this, other lenders who offer very competitive buy-to-let mortgages (increasingly challenger banks and alternative lenders) can hesitate at outgoings without more context. In these cases, Enness’ broker will always ensure your lender understands your full situation, the affordability of the mortgage and the quirks of living in Monaco, providing perspective and clarification into why regular outgoings are likely incomparable with the UK.
Some UK mortgage lenders prefer lending to experienced investors, although most Monaco residents looking to buy buy-to-let property in the UK are unlikely to face any serious setbacks, even if you are a first-time lender. That said, it pays to ensure sure you have a plan in place to show lenders you have thought about how you will manage the property’s marketing, rental and upkeep from Monaco or your other bases. You may find that you cannot borrow as much as a more experienced landlord might if you are a first-time investor, but borrowing will still be an option.
Top slicing can also be an option if necessary. Top slicing refers to when the rental income from your buy-to-let property is insufficient in covering the monthly mortgage repayment. In these circumstances, Enness can often negotiate with lenders who will then consider letting you use a combination of rental income and your personal income to cover the mortgage.
Top slicing can positively impact how much you can borrow, but it is not an option for every borrower. Your broker will need to present a solid case to your lender with solid reasoning why this is the best way forward – top-slicing is not automatically approved, even if you are very wealthy. For their part, lenders will want to ensure that top-slicing is affordable and that you aren’t at additional risk of defaulting on the loan. Given that you are likely to have multi-currency income and live outside the UK, making things less straightforward, an expert like Enness who can negotiate for you will be invaluable.
Regardless of whether you are looking to buy in London or elsewhere in the UK, and however much you want to borrow, Enness will be able to help. Your broker will approach a network of over 500 lenders to obtain the most competitive UK mortgage rates and terms for any UK buy-to-let mortgage for you.