by admin | Dec 12, 2025 | Expat mortgages, Mortgage rates, Re-mortgage, UK mortgage
Expats ~ Have their Cake…with Top Slicing!
Welcome to the next edition of INSIGHTS covering complex UK mortgages
When it comes to BTL mortgages, lenders in the UK use a test to assess affordability called the ICR – Interest Coverage Ratio. This is where the rent from a property (assessed by the banks valuer) should meet the interest only mortgage payment and a little bit more usually to 125% – 145% of the interest only payment.
Here’s where there is a little complexity, on any mortgage deals that are not 5yrs fixed or more, so lets say a 2 or 3 year deal, the buffer is increased by 2%.
Here’s a quick example:
Property 1 Value £180K on 3 yr deal 5.25% (+2% buffer) = 7.25%
Rent = £900
ICR = £900 / 125% = £720 x 12 = £8640 / 7.25% = £119,172 max borrow
On the 5 year deal 5.45%
ICR = £900 / 125% = £720 x 12 = £8640 / 5.45% = £158,532 max borrow
You can see the difference a 5 yr deal makes with the ICR stress being less punitive. This example showcases the 5 year options that usually help to get to max lend of 75% or 80% on Buy to Let deals.
However in parts of the UK namely London and South East, even the 5 year ICR test, comes up short, because the rental yields aren’t at the same ratio to value as in other parts of the country, like Liverpool, Leeds, Manchester. The effect is if your buying a buy to let in London for £950,000 the likelihood is the ICR test may only enable you to borrow up to 60/65%
TOP SLICING Enters the mix..
More lenders are realising that the ICR test is a clunky tool, the effect of it is, a borrower with high affordability on £300K – £500K annual income would still be limited to what the rental ICR test was limiting the borrow capacity to, forcing the borrower to stump up more deposit.
Therefore Top slicing, allows the lender to use residual personal income to make up the ‘gap’ in ICR calculations and the level of borrowing the client needs. This is a game changer particularly for Higher value property where regional rent yields are not performing like other parts of the UK.
Example:
Property Value £1,250,000 on 5 yr deal 4.89%
Rent = £4250
On the 5 year deal 4.89%
ICR = £4250 / 125% = £3400 x 12 = £40800 / 4.89%
= £834,355 max borrow
MAX LTV 66%
Applying Top Slicing
= £937,500 (75%) Max borrow
In Summary, if your considering a Buy To Let deal then speak with your specialist broker or us ! and we can guide on whether a 5 yr deal is a best fit, additionally if the property is higher end and the rental ICR test is a big ask, it may be best to position the mortgage approval with a lender who is known to apply the Top Slicing flexibility, otherwise you get to post valuation and the deal turns sour, with the client having to find 5%-10% more deposit.
If you would like to discuss this or other aspects of your deal book a call here.
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And now for something completely different… what about buying a 2nd home in London for own use as well as an income generating AirBnB / short term let, is this the best of both worlds ?
Expat – AirBnB & Own use
Market Updates
- UK biggest lenders have reduced rates to 2022 levels which is encouraging the market read the FT article here.
- What is ahead for the UK property market in 2026, 2027, 2028 ? well no-one can accurately predict, however this report may give some steer and the UK paints a very regional picture, so investors should analyse their hot spots carefully!
- We love the Property Hub team content – but how did Rob & Rob do in their 2025 predictions for the UK market & property. Their end of year pod is a great listen. Get it here.
Next Steps…
Book a Free Discovery call here & if your not sure what a discovery call is all about Ive made a series of videos on what to expect here.
A Great way to get frequent updates, hints & tips and insider industry knowledge of the complex / expat mortgage market is to join our YouTube channel here.
Our Quick 60sec Quote page allows you to obtain the latest rates to be expected and you can request a specific quote by sending an email to info@mymotgagedeal.co.uk
by admin | Nov 27, 2025 | credit footprint, Expat mortgages, Mortgage rates, Re-mortgage, Releasing cash, Switch mortgages, UK mortgage
Autumn 25 Budget – Blunders, Blasting & Big Shake up!
The OBR blundered the releasing of their market report prior to the Budget Speech, the opposition Blasted the leak and maybe lastly the budget announcement was a Big shake up to the tax system, much of which affects homeowners and landlords.. or something in that order !
The 2025 Autumn Budget 2025 delivered by Rachel Reeves brings some tax-hikes on property income: from April 2027, property (rental) income tax rates rise by 2 percentage points — meaning basic, higher and additional rates move to 22 %, 42 % and 47 % respectively.
For high-value homeowners and investors, a new “mansion tax” (a high-value council-tax surcharge) is to be introduced from April 2028 on properties valued over £2 million.
Sigh of Relief…
The Budget did not add National Insurance on rental income — a relief — yet the higher tax rates on property, savings and dividends altogether weigh more heavily on passive (non-salary) income.
For expat investors or non-UK residents owning UK property, these tax changes make structuring and planning more critical (e.g. via ltd company structuring ) to enhance or maintain profitability.
For an independent viewpoint and 3 key take aways from the Budget here is a great video from Property Hub guys Rob & Rob who we love to listen to!
- Increased property-income tax rates
- Need for smarter structuring for expat investors
- Cash-flow & exit-strategy focus becomes more critical
2025 Budget – A Round Up
Moving Properties Personal Name to Ltd co ?
The Budget 2025 shook the market — higher taxes, tighter yields, and growing pressure on landlords. If you own UK property personally, now’s the moment many investors are asking: is it time to switch to a Ltd company? Watch the following video as we break down what’s changing and why your structure matters.”
Three key takeaways relevant to UK landlords and overseas/ex-pat investors:
- Rental-income tax squeeze is real — The video highlights that recent and upcoming tax changes are biting hard into profit margins, especially for higher-rate taxpayers.
- Company ownership increasingly attractive — With personal tax becoming tougher, holding property via a company appears more appealing: lower corporation tax on rental profits and the ability to deduct full mortgage interest. This could improve net yield for landlords and expat investors.
- Up-front costs & structure planning matter — The shift isn’t cost-free: transferring properties into a company can trigger SDLT (and possibly CGT), plus mortgage refinancing and legal/admin fees. For expat investors doing BTLs via Ltd Co — the long-term tax savings need to be weighed against these one-off costs.
There is one commonly discussed exception: if a property portfolio is held in a genuine business partnership (not just passive ownership) and that entire portfolio is transferred to a newly formed limited company — under certain conditions this qualifies for Incorporation Relief, which can defer or even eliminate both SDLT and CGT on transfer.
Book a call to discuss how we help with financing this scenario >> Here
Potentially Reduce Tax to Zero
Market Updates
Next Steps…
Book a Free Discovery call here & if your not sure what a discovery call is all about Ive made a series of videos on what to expect here.
A Great way to get frequent updates, hints & tips and insider industry knowledge of the complex / expat mortgage market is to join our YouTube channel here.
Our Quick 60sec Quote page allows you to obtain the latest rates to be expected and you can request a specific quote by sending an email to info@mymotgagedeal.co.uk
by admin | Nov 12, 2025 | credit footprint, credit reference, Expat mortgages, Mortgage rates, Releasing cash, Switch mortgages, UK mortgage
Credit Blips ! Is the Mortgage a No Go?
Welcome to a further edition of INSIGHTS a newsletter covering aspects of UK mortgages for clients with complex circumstances.
Mortgage lenders are becoming more tolerant of minor issues, and especially where plausible explanations are provided. However if you have a low or no score then there are some things you can do to improve your credit file in the UK if your overseas or not.
In the following we explore:
- Three credit ref agencies
- How to address any blips
- Why small credit facilities can help
Insight -Some lenders accept a low score or they dont use machine credit ratings, rather they have manual credit file via underwriter checks.
Here’s a case study – 2 min video YouTube below:
Improve your Credit file
What if you don’t have any credit file in the UK?
There are some lenders who will permit no credit rating in the UK, provided they have visibility in country of residence or if they can establish a previous UK credit footprint ( which is slight different to a score)
Case Study –
Mr Spears – UK Expat in UAE – had been outside UK for over 10 years so no credit footprint or Score in the UK, he did though have a good credit score in UAE and he was earning over £150K GBP along with wife (Non UK national) .
Property Value £500K Mortgage Needed £375K
Deal Sourced – £375K on 20 Yr term Capital & Interest
4.5% 5 yr fxed
Monthly Cost:£2,374 pcm
Market Updates
- House Price Data released for October and is showing a slight rise month on month Annual house price growth edges higher in October
- The Autumn budget is 2 weeks away, and some landlords are holding their breath.. as extra taxes on Landlords is being seen as likely – but should Landlords be quick to panic or leave the market – here’s the view from one expert
- If you’re an aspiring Landlord then this report might make your ears pick up with rent yields reaching their highest in a decade! read here
Next Steps…
Book a Free Discovery call here & if your not sure what a discovery call is all about Ive made a series of videos on what to expect here.
A Great way to get frequent updates, hints & tips and insider industry knowledge of the complex / expat mortgage market is to join our YouTube channel here.
Our Quick 60sec Quote page allows you to obtain the latest rates to be expected and you can request a specific quote by sending an email to info@mymotgagedeal.co.uk
