Moving to Australia

Posted on 3 October 2011 by Louise

I have a mortgage in the UK and have just secured a permanent residency visa to live and work in Australia.  I would like to keep my house in the UK and rent it out (initially to family) for 2 reasons a) I might not settle in Australia and want to come back to the UK and b) even if I do settle I'd like to keep the house as an investment for my retirement.

Before I leave the UK can I apply for a new mortgage product and fix my mortgage for say 2 or 3 years? However, I'm concerned that after the end of the product I will go onto the lender's variable rate and should the house be empty between tenants, I won't be able to afford the monthly payments, and less so if rates increase.  My question is, can I apply for another English mortgage if I only have an income in Australia?  If not, should I take out an interest only mortgage and pay extra off the capital each month because then I may be able to afford the monthly payments should the house be empty?


Now is the time to sort out the mortgage on your property because once you move to Australia and become resident there you will find it nigh impossible to obtain a mortgage in the UK. 

Whilst I can understand your reasons for wanting to let to family this will restrict you choice of mortgage lenders and the products available.  This is because any mortgage where the tenant is related to the borrower will be regulated by the Financial Services Agency and there are tighter restrictions placed on the lender.  If however, you were to let to a private individual using an Assured Shorthold Tenancy then the choice of products and Lenders would be wider.

I think that you need to speak to an independent mortgage broker who can take you through the different product choices and the different lender requirements, such as rental income.  All lenders will want your anticipated rental to exceed your monthly mortgage interest payment by between 120- 130% and the reason for this is to give you the chance to build up an emergency pot of funds to cover rental voids and unexpected maintenance or repair costs.

I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to advise you on your situation.


Answers provided in response to Ask the experts 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 necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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