Case study: emigrating couple re-mortgage their home as a buy-to-let

Investec Mortgage Intermediaries Team

A HNW couple moving abroad seek to re-mortgage their prime London property as a buy-to-let. But what if their earnings aren’t quite enough to support the size of the loan? What options do they have?

Whether it’s in search of a better quality of life, in response to the uncertainty over Brexit, or simply a career decision, it’s not unusual for high net worth individuals (HNWIs) to move abroad. Wealth migration is accelerating globally, according to a report by New World Wealth, with approximately 95,000 HNWIs worldwide migrating in 2017, compared with 82,000 in 2016. And the UK saw the fourth highest outflow of HNWIs in 2017.
 
But that doesn’t mean these expats are necessarily selling their properties in the UK before heading overseas. With reasons to be optimistic about London’s prime real estate market, remortgaging an existing property as a buy-to-let (BTL) can be an attractive investment prospect.
 
Here at Investec, we recently helped a client in this position, letting them re-mortgage their home before they made their move overseas.
 

The client

 
In this instance, a couple who owned a prime property in London planned to relocate to Africa. They were looking to re-mortgage their UK residence as a BTL property and raise some capital to replenish their liquidity.
 

The challenge

 
The property had not yet been let, and although the couple’s net asset value met Investec’s lending criteria, their earnings weren’t enough to support the size of the loan. Also, because the property was not yet let, the property was yet to show any return which could support the loan repayments.
 

The solution

 
To overcome this challenge, we offered a mortgage to the couple and one of their parents, whose income supported the re-mortgage and who would still be based in the UK. This arrangement made the mortgage affordable while the property was still on the market and available to let.
 
Remortgaging their home to a BTL was an appealing option for these clients, as it gave them the option to return to a property they own, should they return to the UK in the future. They were able to replenish their liquidity while securing their payments with a competitive five-year, fixed-rate, interest-only mortgage.

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