Case Study: Expat Holiday Let Mortgage in Scotland

The Client

Our client is a British citizen who has lived in Chicago, Illinois, for 14 years. He is employed full-time as Chief Operating Officer of an established US company of approximately 400 employees and also holds a 25% equity interest in that business, a shareholding valued at more than US$3 million. He earns a base salary of approximately US$350,000. He owns his US home (valued at approximately US$1.4 million, with a mortgage of approximately US$900,000) and is, overall, in a strong financial position.

Having lived abroad for 14 years, he no longer held an active UK credit history and did not currently own any UK property, but retained his British citizenship and wished to re-establish a long-term UK banking relationship with a view to continued investment in UK property.

The Objective

The client wished to purchase an established freehold holiday-let business in mainland Scotland – a property with a strong trading history, excellent guest reviews, high occupancy and forward bookings already in place.

His intention was to run it primarily as an income-producing holiday-let investment, with only occasional personal use, a few weeks a year, as a family holiday home when visiting Scotland.

How We Assessed His Options

Two specialisms had to be reconciled at once: expat lending and Scottish holiday-let lending.

Each narrows the market considerably on its own; together they leave a genuinely limited section of the market. We set his circumstances against the realistic routes available:

Step 1 – Standard UK residential and BTL routes

We first considered whether mainstream residential or standard buy-to-let lending could serve the purchase. This was ruled out: the security is a trading holiday-let business, held principally as an income-producing investment rather than as a residence, with only occasional personal use of a few weeks a year as a family holiday home.

That commercial, mixed-use character, combined with the applicant’s expat status – no UK credit footprint, no UK employment income, no current UK property ownership and 14 years overseas – falls outside standard criteria.

Step 2 – Specialist expat holiday-let lender

We conducted a whole-of-market search across the small pool of lenders willing to combine expat and Scottish holiday-let criteria, and presented the case with the client’s financial strength, professional standing and the property’s established trading history to the fore.

This is where the case found its home, an expat holiday let mortgage with lending in Scotland.

Identifying the Right Route

Following presentation of the case, a suitable lender confirmed a decision in principle – yes, subject to documentation, valuation and their standard underwriting. Two conditions in particular shape the next steps:

1. UK bank account: the applicant will need a UK bank account held for three months by completion. As this takes time to establish, we advised opening one as a priority so it is in place when required – which also supports his wider aim of re-establishing a UK banking relationship.
2. Income treatment: because of his 25% equity interest in the company, the lender will treat his income as self-employed rather than employed. As a result, two years’ company accounts will be required as part of the assessment.