excellent opportunity to place a lucrative international mortgage, as previous customers will usually prefer to work with a broker they have dealt with
in the past. Maintaining a relationship with these
overseas customers is crucial to driving international mortgage business. UK intermediaries should also work with their local estate agents, as they will often see overseas customers looking to buy a property in the UK, either as an investment or with a view to moving to the UK. However, the client might not have the UK credit history necessary to get a domestic mortgage, and therefore requires an international mortgage. There are a number of reasons why
UK nationals who live abroad are buying properties in the UK. It is very important that brokers are aware of these reasons in order best to understand how to target international business. To begin with, UK property market is
deemed to be more stable than many overseas markets and moreover has been a good investment, for example current rental demand is increasing the return. Secondly, UK regulations do not
distinguish between international buyers and UK-based buyers, so it is viewed as an easy place to invest in property. Thirdly, the exchange rate is currently favourable, which means that buyers find it much easier to raise the deposit
for a property. Next, family reasons play a major role
in the decision to retain property in the UK; expatriates may still have family in the UK, or perhaps one half of their family has moved overseas to work and the other has remained at home. Finally, expatriates simply want to remain on the property ladder – either because it’s a good investment, or because they aren’t sure when they wish to return to the UK and want to make it as easy as possible to return. For brokers, the international
mortgage market has sizeable returns. At Lloyds TSB International, we pay brokers a 0.5% procurement fee in most locations, which coupled with average loan sizes of about £300,000 for UK property and an uncapped fee, means
“Maintaining a rela- tionship with these overseas customers is crucial to driving international mort- gage business. UK intermediaries should also work with their local estate agents as they will often see overseas customers looking to buy a property in the UK”
that we often pay commissions running into thousands of pounds per case.
crOss salE OppOrtunity At the same time, the distance involved and potential language barriers mean that international customers often prefer to work with just one point of contact – this presents brokers with many opportunities for cross-selling of other products like home or life insurance. For this same reason, there is a
very high ratio of repeat business opportunities, as many overseas investors are often looking to build a portfolio of properties, and if they are given good service by a broker, they will most likely come back when looking to purchase another property – we find that many customers take on several mortgages with us as they continue to invest in property. Also, given the perceived difficulty
among overseas investors of finding a broker, they are likely to recommend a good one to their friends. If a broker is able to source services for their clients (particularly those purchasing properties in order to let them out), such as someone to manage the property, this will improve customer satisfaction
service and lead to further opportunities to profit. The logistics involved in placing an
international mortgage vary country by country. In the UK, the process is very similar to acquiring a UK mortgage and is therefore the easiest of all the countries in which we operate. We find that completion usually takes two to three months, but this of course depends on the speed of both the customer and the solicitor. Outside the UK, the process usually takes longer, and can take up to four to six months in countries like France. Because of this, it is best to work with an experienced lender. For instance, we provide all paperwork in English which means that brokers and customers do not have to get documents translated themselves.
lOgistics Brokers should also be aware of differing tax and legal systems if the property is in a country other than the UK – sometimes these transactions can be subject to taxes that do not exist in the UK, or the rates may be much higher. The customer’s solicitor should be able to provide the tax costs for the customer’s circumstances and their transaction. The time it takes and differing tax
and legal systems are the main factors that can cause problems for brokers and their customers, but as long as brokers are aware of these in advance of starting the process, they can make adequate preparations to ensure they do not present any major issues, and they can set their customers’ expectations. Overall, the international mortgage
market offers brokers a real opportunity to diversify and grow their income streams. Brokers should consider opportunities to place international mortgages as well as converting enquiries about them to business rather than passing these on. There are some potential areas of difficulty in terms of process, but as long as brokers are aware of these, and work with an experienced international lender, the market can be straight forward and lucrative. n
mortGaGe introducer JUNE 2011 49
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