Is it possible for me to remortgage my flat whist living abroad?

Posted on 28 March 2008

I have a 2 bedroom flat which I bought for £166,500 and now conservatively valued at about £195,000. I have taken up a job (I am a Physician in training) in the USA and I am likely to be here for another 10 years. I have a 100% mortgage with the 5 year fixed rate (5.39%) ending in December, 2008. I have been paying the interest only of £746 pounds for the past 4 years and renting it out currently at £775 pounds a month. Is there a way for me to remortgage to a buy to let, without having to put in more money and my living abroad not being a problem?

I assume that your current lender has given you permission to let (if you have gone to the US already) if not, you should request this; they are not unreasonable.  In normal circumstances if your current lender offers buy-to-lets, they would allow you to switch to one of their deals in December, or, you can remortgage elsewhere.  However, whilst your current mortgage is only 85% of the property value, your problem is the rental income.  It is not sufficient to support a loan of the size you need. Also, the mortgage markets are looking nasty, and I would not take this for granted. It is entirely possible that you might not be able to borrow more than 75% of the property value by December 2008.  If this is the case, you need to start paying money off now.

Unfortunately, as your placement is for ten years, I suspect you fall outside of the ex-pat mortgages offered by some lenders, where your own income and the rent are taken into account on your only UK property.  But I suggest you speak to Cheltenham & Gloucester, Lloyds and Halifax anyway, (or have a broker do it all for you, Charcol is on 0800 358 5560) as they can often help on cases like this.

In worst case scenario, unless you can make a dent in the loan amount now, it might be that you are better off selling this property and buying one which will bring in enough rent to cover its debt.

 

Answers provided in response to Ask Bea are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not neccessarily represent the views, positions, strategies or opinions of Charcol Limited. All comments are made in good faith, and neither Charcol Limited nor Bea will accept liability for them.

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