The value of offshore lending
Offshore banks are geared up to offer offshore mortgages says
Irish Permanent International
The are still many reasons why
expats, foreign domiciled individuals or individuals with
dual nationalities living in the UK can benefit from services
provided by offshore financial centres like the Isle of Man.
The services provided include tax planning; banking including
deposit, investment and lending services; fund management;
trust and corporate services; legal and accounting services.
Traditionally offshore banks and building societies focused
mainly on the provision of deposit and investment services.
In recent years, however, banks have become more involved
in lending primarily because of the growth in property investment
in the UK both in the commercial and buy-to-let markets. There
can also be tax benefits to borrow offshore rather than onshore.
UK retail banks and other UK lenders have been reluctant to
lend to the expat, offshore companies or trusts. The main
reason for this is that they are not properly geared up to
deal with this type of customer and they do not understand
the nuances associated with offshore structures. This is not
the case with the offshore banking industry where banks have
been dealing with expats, foreign domiciled individuals and
offshore structures for years. These categories of customers
are the bank’s core business and their systems, policies
and procedures are geared accordingly.
Philip Murray, Managing Director of Irish Permanent International
says, “From a group perspective, our UK operation does
not get involved with the provision of lending services to
expats or offshore structures because they do not have the
expertise and experience to deal with them and we do.”
In terms of lending product offerings the offshore banks are
very competitive in terms of rates and loan to value ( LTV).
85% LTV can be obtained for residential investment properties
and interest rates range between 1% and 1.5% over base.
Offshore banks and Building Societies also compete aggressively
for deposit business either to fund their own or their parents
loan book, and attractive rates are available even more so
than from onshore banks. Interest is currently paid gross
although that will change when the EU Savings Tax Directive
comes into force for customers who are resident in the EU.
Offshore Banks will then apply a withholding /retention tax
for those customers.
Philip Murray
Managing Director
Irish Permanent International
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