Investment mortgage guide for UK and international property investments
What this guide covers
There are two types of investment mortgage:
- A buy-to-let mortgage. If you are buying a property in the UK to rent out to tenants then you need a buy-to-let mortgage.
- An international investment mortgage. This is for buying an investment property or second home outside the UK.
We also have guides on buy-to-let mortgages and currency mortgages.
Will you be able to get an investment mortgage?
Here are some of the points to consider.
Can I raise a big enough deposit?
Unlike a residential mortgage, for which the deposit required is around 10%, you will have to provide at least 40% for an investment or buy-to-let mortgage.
Will the rental income of the property be sufficient?
The lender will want the monthly income on the property to be at least 125% to 135% of the monthly interest payments on the mortgage. This income level will need to be verified by an independent source.
The extra 25% to 35% over monthly interest allows for maintenance on the property and periods of vacancy.
What repayment structures are available?
Fixed rate
A fixed rate mortgage enables you to budget ahead knowing that in the first two to five years the interest rate will not change. Some Barclays International clients may be able to secure a longer fixed period.
At the end of the fixed period, the mortgage will normally revert to the lender's standard variable rate mortgage.
Standard variable rate
The standard variable rate (SVR) provides Barclays International clients with a high level of flexibility, as there is no arrangement fee and no early repayment charge.
The rate usually tracks the Bank of England base rate of interest. If the base rate increases by 0.5% then so usually does the SVR.
Discount (subject to availability)
This is based on the SVR but offers a lower rate of interest for the first couple of years.
Tracker
The interest rate on a tracker mortgage tracks the Barclays Bank Base Rate (BBBR), but can vary from this.
There are normally no early repayment charges so it can be popular with clients who want to make large repayments.
Capped (subject to availability)
A Barclays International capped mortgage is like an SVR but with a maximum interest rate. This can provide the assurance of knowing the limit that your monthly repayments will not exceed.
Preparing for a change in repayment structure
At the end of a discount, fixed rate or any other introductory period you need to prepare for the possibility of your monthly payments increasing.
Foreign currency
A foreign currency mortgage enables you to match the currency in which you are paid with that of the mortgage. This can help reduce currency exchange risk.
For example, you might have a mortgage in sterling but a salary paid in dollars. If the value of the dollar weakens in relation to the pound then your monthly mortgage payments could increase.
Barclays International offers onshore and offshore mortgages in a range of major currencies for property purchases in the UK, Jersey, Guernsey, the Isle of Man and Gibraltar.
Offshore
Barclays International can place international investment and buy-to-let mortgages in the well-regulated and financially stable jurisdiction of the Isle of Man.
How much can you borrow?
Barclays International will ask a client a series of questions to determine how much you can afford to borrow and what sort of mortgage is best for you. This service is free and there is no commitment required.
See the interest rates available on our international mortgages.
Important information
Barclays International can help you with some of the challenges of buying a new property.
Surveys
There are three types of surveys available:
- Barclays valuation. This confirms the value and overall condition of the property.
- Barclays survey and valuation. This also makes reference to issues such as dampness and decay.
- Barclays building survey. This report covers all aspects of the property and comments on areas such as cracking, decay and other defects.
All Barclays International valuations and surveys also provide advice on energy saving, maintaining your property, security and fire safety.
Searches
The Barclays International mortgage service team can help you understand what searches need to be conducted and why. For example, you need to confirm the existing legal ownership of the property, and make sure that no major developments are planned for construction nearby.
Fees
The lawyer, the surveyor and the lender will all charge for their work. The fee will vary according to the property and the regulations of the country in which you are buying. Barclays International will help clients to prepare themselves for these fees.
Taxes
The taxes you may need to allow for can include:
- Purchase tax or Stamp Duty Land Tax
- Capital gains tax when selling the property
- Taxes on earnings made by renting the property out
The taxes you pay will vary depending on your personal circumstances as well as the tax regime within which you buy the property, and that within which you place the mortgage.
Barclays International is happy to introduce clients to its preferred tax advisers, Ernst and Young.
Local regulations
The regulations governing buildings and property investments vary from country to country. It is essential that you comply with them. Barclays International will help prepare you for these.
Insurance
You are obliged to arrange for the property to be covered by buildings insurance. If the property is going to be rented out to tenants then you might also want other forms of insurance including landlord liability and vacant cover.
Barclays can introduce clients to its preferred service provider.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
If your loan is denominated in a currency other than sterling CHANGES IN THE EXCHANGE RATE MAY INCREASE THE STERLING EQUIVALENT OF YOUR DEBT.
For more information or to apply
To apply or find out more information speak to a Barclays International Mortgage Adviser. We specialise in providing a range of residential/investment mortgages for property purchases in the UK, Jersey, Guernsey, Isle of Man and Gibraltar.
Call us on +44 (0)1624 684305†
Alternatively please contact your Barclays International Relationship Manager, if you have one.
Terms and conditions apply to all mortgage products. We strongly recommend that you obtain your own independent tax advice before proceeding with an offshore mortgage.
Barclays will require a first charge over the property.
Barclays is a responsible lender and when considering your application for borrowing, your financial circumstances will be appraised. Remember should you run into difficulties please contact us immediately.
In all forms of advertising and marketing material where repayments are quoted, we will show clearly a typical Annual Percentage Rate (APR). We will also clearly indicate in all lending-related advertising issued in Jersey that we abide by the Code of Practice for Consumer Lending.
You have sole responsibility for the management of your tax and legal affairs including making any applicable filings and payments and complying with any applicable laws and regulations. We have not and will not provide you with tax or legal advice and recommend that you obtain your own independent tax and legal advice tailored to your individual circumstances.
The products and services described on this page are provided by the following companies, which are part of Barclays: Barclays Bank PLC in England and Wales and Barclays Private Clients International Limited in the Isle of Man, Jersey and Guernsey. For further information on these companies and Barclays please read the Important Information.
