Posted on 2 April 2016 by Stephen
"My wife and I have recently moved back to UK after years abroad. We have £400,000 in cash savings and a home (that was our primary residence) we let out that has around £160,000 in equity (£320,000 value). We currently rent where we live. My father recently passed away and left me 50% of his home (where my step mother resides and has the right to until she sees fit so we cannot sell), this amounts to £400,000. The question is, can I somehow leverage either or both of the equity and put together with my £400,000 in cash to fund a deposit on a £1,600,000 home?"
Thank you for your question, via our ‘Ask the Expert’ section of our website. The possibility of you obtaining a mortgage would depend on a number of factors. The main one being whether you still hold a credit footprint in the UK.
As an ex-pat there are a good number of lenders who are still active in this sector, and we can certainly look to assist you in getting a mortgage, though we would need to know the exact figures (joint income, rental income, etc...) before being able to say 100% if what you are looking to do can be done. Typically, you'd need around a 25% as a deposit level for an expat mortgage. It's worth advising you though, as with most mortgages, the more money you can put in the better access you may have to more lenders and a better rate.
You are looking to borrow £800,000 on a purchase price of £1.6m.You have income of £200,000 and property LTV of 50% (subject to valuation) which puts you in a very good position to proceed with this type of transaction. In addition you have £400,000 cash and £160,000 equity in your BTL property. The fact that you already have a BTL property in the UK, is not a hindrance, in fact it is a positive. The majority of lenders in the ex-pat arena prefer that you have some sort of credit profile / history in the UK, as this gives them a greater level of comfort when making the decision to lend. In terms of your share of your father’s house, we may be able to use this as leverage to secure the loan, but this will be at the lender’s discretion as your stepmother still resides at the property. You will need permission of your stepmother and she will also need to seek separate independent legal advice.
It's important to remember that you would also need to factor in buying costs such as solicitors fees, stamp duty and estate agent fees. If you want to discuss your options in more detail, then you can contact one of our consultants on 0344 346 3672 and they'll be able to sort out a convenient time to speak and give you a more exact idea of how we can help you.
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.