***UPDATED FOR 2018 | Buying a house as an expat can be difficult unless you have the cash to buy the property outright, as most British banks and building societies perceive expat borrowers as higher risk and refuse to lend. The good news is that there are options available, with certain lenders at specific mortgage rates that specialise in the following:
- Expats buying in the UK
- Expats buying abroad
- Expats remortgaging a UK property
- Expat buy to lets in the UK
- Expat holiday homes abroad
- Expats buying and returning to the UK
- International mortgages
- Expat savings, investments, and pensions
To find out which expat mortgages are best for you please make an enquiry, or give us a call on 0800 304 7880. For more info read on – If you’re an expat looking for a mortgage in the UK there’s several factors to consider (click to read more):
Expat mortgage loan purposes
If you are looking for an expat mortgage to purchase a property then the criteria can be different to if you are remortgaging, especially if you don’t already own a property in the UK. Those owning a property already and looking to remortgage may find it easier as you’re likely to have a more comprehensive and traceable credit history.
Buy to let/residential repatriates
Buy to let mortgages for expats planning to remain abroad have a completely different application process to residential mortgages for expats who are returning home (repatriates). Those staying abroad will need to: a) Have a UK bank account, b) A minimum income of equivalent £25,000, c) A deposit of at least 25% if owning a property in the UK already, 35% if purchasing the first property in the UK. d) Can take the mortgage on an interest only or repayment basis.
Re-pat mortgages are offered by a different range of lenders and require borrowers to meet different criteria: a) to have evidence of a job back in the UK (a contract if employed, and an internationally recognised accountant and a business that is still able to trade if self-employed), b) a borrowing term that goes no longer than 70 years of age, c) a clean credit history, d) must be taking the mortgage on a repayment basis.
One of the main problems faced by expats is that living abroad has an effect on your credit history. If you have lived away for long enough, lenders in the UK may not be able to trace any credit history at all, and while no history does mean that you have no bad credit, the absence of a history makes you an unknown quantity for potential lenders, who will consider you a higher risk. As a result, lenders will often decline expat mortgage applications because they don’t meet the pass rate. However, it is not always essential to have a credit history, and there are specialist providers of UK mortgages for expats that are dedicated to making the application process for expats possible while offering competitive interest rates.
As the advisors we work with have access to all lenders in the UK, there are specialist expat lenders that can offer finance specific to your specific situation.
Another problem often faced by expats looking for a mortgage arises from having an overseas income. Lenders again perceive this as a high risk factor because establishing certain criteria, such as the identity of an employer / how sustainable the income is / how much it equates to if earned in a foreign currency, etc. Not to mention making the process more difficult with language barriers and fluctuating exchange rates. The stability of an overseas income and the risk of fraud are other reasons why many lenders don’t offer expat mortgages.
However, if you’re an expat who has been turned down because of your income, don’t be disheartened. The specialists we work with deal regularly with lenders who provide expat mortgages with overseas income. There are several factors relating to income that are worth considering before making an enquiry, as outlined below. Typically, being employed is far easier than self-employed and there are a far greater number of lenders to consider you if you are employed as obtaining and evidencing the relevant info is far simpler.
- Minimum income us usually equivalent of £25,000
- Ideally working for an internationally recognised employer (not essential)
- References and payslips must usually be written in or translated into English (although not always essential depending on the language)
- Income does not have to be paid into a UK account (although some lenders may require this
- Minimum income us usually equivalent of £25,0000
- Accountant must be internationally recognised
- Standard employed criteria applies
As mentioned above, the minimum level of deposit required is usually 25% of the property value, although the level of deposit you’ll need for your mortgage can differ depending on the type and location of property you’re looking to purchase. Generally, the more deposit the easier to find finance, and the better the rates. Obtaining a mortgage with less than 25% will only really be possible if you have sufficient equity in other properties that can be used as security.
To get a mortgage with 25% deposit you need to have another property in the UK already. If you don’t currently own a property in the UK and you are looking to make your first purchase, then the likelihood is that you’ll need 35% deposit.
If your deposit is in savings or an investment overseas, justifying/proving deposit can be a tricky thing if you’re an expat living abroad, as many lenders only accept deposits saved or gifted from a UK source that can be easily traced from a UK account. Many expats keep accounts open back home anyway, but obviously those who don’t may well struggle with certain lenders.
Acceptable sources of deposit are:
- Savings in account (UK or overseas depending on country)
- Investments (Stocks / shares / capital held in the UK or abroad)
- Sale of property (UK or overseas, again depending on country)
- Equity in another property (This is simplest if the property you own is in the UK, but may be possible with an overseas international mortgage / secured loan lender. If the property is in the UK there are many lenders who will consider ex-pat remortgages or secured borrowing, to secure a charge against a property you already own).
- Gifted deposit (Typically expat lenders would prefer you to have your own deposit available from your own sources, but it may be possible for some to consider a deposit coming from a relative. Although by exception it may be possible, depending on the circumstances, for a friend or third party to gift deposit).
- Other (If you have deposit from another source not in this list, it is worth checking with an advisor if this will be acceptable to lenders or not).
It is preferred and often essential, that all expat mortgage applicants have an active UK bank account from which the new mortgage payments can be made.
Buy to Let Mortgages for Expats
Since 2013 there has been a surge in demand from expats looking for buy-to-let products, with many investors having the cash to buy abroad now looking back home at the expanding market for the next bargain in their portfolio. While many lenders only consider dealing with experienced landlords with a strong track record, there are specialists that consider first time buyer expats.
Most lenders will view an expat buy to let investment as even higher risk, so expats looking to finance investment properties may require a larger deposit than those resident in the UK. Some specialist lenders base lending on the income from the property rather than personal earned income, so if it is a sound investment, living overseas shouldn’t prevent an expat from buying a house to rent out in the UK.