66 . 7 %

By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 2nd November 2020*

Are foreign currency mortgages possible in the UK?

If you only have overseas income, you may well have had trouble finding a UK mortgage. This is because the majority of lenders in the UK only consider income earned in the UK, paid in pounds sterling. Many lenders generally consider both the currency exchange and less familiar employment sectors a greater risk.

Foreign currency income may be harder to verify, with additional checks taking time and resource many lenders just don’t want or need, to entertain.

Thankfully, there are mortgage lenders who will consider a range of foreign incomes, which is what this article will cover.

Read from top to bottom for all the details, or click a link to jump straight to the information you’re after:

We’ll find the perfect mortgage broker for you - for free

Save time and money with an expert mortgage broker who specialises in cases like yours

  • We've helped over 120,000 get the right advice
  • Our form only takes a minute, then let us do the hard work
  • Save up to £400 per year with the right advice (source: FCA)
  • All the brokers we work with have whole of market access

Which currencies are acceptable?

Having established that there are lenders willing to consider giving borrowers a UK mortgage based on income from various countries around the world, you simply need to find the right lender for your specific set of circumstances.

Below is a list of a few of the currencies some UK mortgage lenders will consider:

  • Euro (EUR)
  • US Dollars (USD)
  • Yen (JPY)
  • Australian Dollar (AUD)
  • Polish Zloty (ZL)
  • Russian Ruble (RUB)

What are the main factors affecting overseas income mortgage applications?

The main areas that impact lending decisions and whether someone earning foreign income would qualify for mortgage approval are:

  • Is the applicant employed or self-employed abroad? (If self-employed, is the company registered in the UK?)
  • The currency the income is paid in
  • The country the work is carried out in
  • The location/name/size of the company/organisation the income is paid from, and if they also have branches in the UK or, if not, whether the company’s accountancy firm does
  • The location/name/size of the bank/organisation account the income is paid into, and if they also have branches in the UK
  • Where the tax is paid (UK or country of origin)
  • The length of employment/time the income has been paid
  • The type of work/stability of the sector the applicant works in
  • The amount and source of deposit (and which country it is currently held in)

As well as making sure you meet general affordability criteria, other criteria a lender will take into consideration are:

  • Whether or not the borrower has any adverse credit
  • The location of the property, and viability of the “story” to ensure suitable lending
  • The purpose of lending (Residential / BTL / commercial etc.)
  • The property and tenure type (flat / house; freehold/leasehold)

Will my employment status be an issue?

For employed workers earning income paid in overseas currency, there are far more lenders available than to those who are self-employed.

In fact, there’s only a small number of more specialist lenders willing to consider overseas self-employed mortgages. This is probably due to the increased difficulty in being able to establish and verify actual earned disposable income and calculate reasonable affordability.

Tax systems are completely different country to country, and for a UK lender to effectively understand liabilities for multiple areas is often too big an ask and, ultimately, not worth a lender’s time and trouble.

As a result, if self-employed income is earned overseas then lenders will almost always require the company to be domiciled in the UK, with full accounts drawn and tax paid on income as if it were from the UK.

There may be exceptions to this rule. A small number of mortgage lenders will, on a case-by-case basis lend to borrowers with the right business case who can provide enough evidence to satisfy lenders that approval is appropriate.

Will the currency of income earned impact mortgage approval?

Yes, the currency you earn your income in can have a direct effect on whether you can get the mortgage you want.

When it comes to your earnings, one of the first things a lender will ask is what currency you earn your income in.

While all UK lenders will consider income paid in GBP, only a handful offer euro mortgages and there are even fewer lenders offering mortgages based on US Dollars and fewer still for income in Japanese Yen.

If you have been declined because your income is paid in any kind of foreign currency, this doesn’t mean there aren’t other lenders out there for you.

We work with expert brokers with experience in helping other customers earning their income in currencies other than the British pound. They are whole-of-market brokers with access to specialist lenders and they know which lenders will offer mortgages to people who don’t fit the typical profile.

Make an enquiry for a free, no obligation chat and we’ll match you with a broker who specialises in this area.

How will the location of the work/job activity impact mortgage approval?

If you are employed in France, Germany or Spain your mortgage is more likely to be approved than it may be if you work in a country further away geographically, particularly if the country in question is under financial sanction.

This comes into whether the “story” of the situation is feasible or not. For example, a lender will want to know if you are going to be resident in the property or leave it unoccupied or let without consent, which would infringe the terms of the mortgage. The lender will also be interested in the strength of that country’s economy and whether the income is deemed to be truly sustainable.

Could the overseas company I work for impact mortgage approval?

Again this comes down to risk. Lenders are more likely to approve a borrower with foreign income who is working in a multi-national company with a solid reputation in the UK, than for someone working in a spare bedroom of a start-up.

It is far less likely that a large multi-national business would put itself or its employees under any scrutiny from a tax or revenue perspective, than a firm that has no ties to the UK whatsoever.

Common examples of approvals come from those who are asked to work abroad in another arm of the business for a short term, such as someone working on production for JCB in their manufacturing plant in China.

Could the way I’m paid have an impact?

If you are paid in overseas income in cash, it’s highly unlikely to be approved by a UK mortgage lender without great reason, such as the nature of the risk and difficulty to validate the source of funds. 

Most lenders would want to see the money you earn is paid directly into a bank account.

If the bank is a recognised UK bank, all the better. Generally, if the bank your income is paid into is in the UK, or has branches in the UK, then this is considered lower risk for a UK lender considering a borrower with overseas income.

If the bank is overseas and you transfer this money into a UK account, then it makes a difference which bank you use.

Smaller, less known banks may be subject to different regulation, support and security in certain countries overseas. And are, therefore, likely to be considered higher risk when it comes to ensuring transfers for mortgage payments are timely and legitimate.

If, for example, you work in the UK and Spain, for a Spanish company, are paid in Euros through a Spanish account with Santander, that you then transfer to a different UK account, lenders may consider this lower risk, because of the common understanding the bank has of both UK and Spanish markets and tax systems, as well as clear and reliable audit trails.

How the country in which you pay tax impacts foreign currency income mortgages

Most lenders considering overseas income require UK tax to be paid.

If income is earned tax-free in a certain country and is brought back into the UK, then self-assessment may be required to evidence the income earned and tax paid accordingly.

If income is taxed at source overseas then any tax due according to UK law needs to be adhered to.

If no tax is paid whatsoever, then most UK lenders will decline the application, unless there is an acceptable and viable explanation, in which case certain lenders may consider those with a strong business case, regardless of your tax position.

How the length of employment can impact a foreign currency mortgage

As with any type of employment, lenders consider those in a role long term much less risk than those who are applying for a mortgage with a new job.

Generally this is because a) the borrower may not perform well and be fired, possibly within a probationary period, and b) the borrower themselves may not get on in the role and want to leave. Both outcomes result in a potential period with no income to support the mortgage.

Many lenders consider this a scenario outside of their policy for several reasons:

  • Employment law overseas may be different
  • The borrower may not be subject to any compensation or notice periods
  • The borrower may struggle to adjust to a different working culture
  • Different markets and languages a borrower needs to adapt to
  • All sorts of other potential barriers that may impact the longevity of a borrower in a foreign company

However, once someone has been in their role for over 12 months, the risk of these things being an issue can be considered far lower.

Every lender is different in what industries they would consider as “higher risk” but, in general, professionals working internationally are deemed lower risk than lower skilled or manual jobs.

For instance, someone employed as a part-time medical consultant in the US, paid in dollars, may be less risk than someone selling tulips for a Dutch florist paid in euros.

Is deposit size a factor?

It’s not uncommon for those paid in foreign income to also have their deposit held overseas.

If your mortgage deposit is held in a recognised bank account with a clear audit trail of the build-up of funds, then similar rules apply as to the name/size/location of the bank the income is paid into.

Typically, if the bank has UK branches it’ll be accepted by most lenders, if not then further checks may be needed to ensure the funds meet all anti-money laundering requirements.

For specific requirements, we suggest making an enquiry and one of the expert advisors we work with will review all the potential problem areas prior to submitting an application.

Will bad credit affect my application?

If there’s previous bad credit showing on your credit file, then this can limit the options available to you.

Below is a list of potential credit issues you may be faced with as a borrower:

  • Adverse credit overview
  • Low credit score
  • Mortgage Arrears
  • Defaults
  • County Court Judgements (CCJs)
  • Individual Voluntary Arrangements (IVAs)
  • Debt Management Plans (DMPs)
  • Bankruptcy
  • Repossession

Generally, the smaller, less severe, older the issue, and the larger the deposit, the more chance there is of approval. For more on bad credit mortgages visit our specific mortgages for bad credit section here.

What else might affect a foreign currency mortgage in the UK?

Multi currency mortgages

There can be very complex requirements if you are intending to pay a mortgage through multiple currencies. This requires expert advice that the brokers we work with could provide.

The location of the property, and viability of the “story” 

If the property is based in England and Wales there are more lenders available than there are for mortgages in Scotland or for mortgages in Northern Ireland.

If the property is based overseas then this is classed as an overseas purchase. Generally,  only those lenders considering overseas mortgages will accept applications on overseas products.

The purpose for lending 

For many lenders offering both residential and buy-to-let mortgages, there can be a completely different set of lending criteria. Commercial lenders may be more considerate of overseas income as they are also subject to different regulatory requirements.

The property and tenure type 

If you are buying or refinancing a traditional brick built house in solid condition then its unlikely you’ll be restricted by any lender due to the property type, tenure or construction material.

Those buying a freehold flat or a building with a thatched roof however, may be restricted to the number of lenders that will consider an application. Add to this a borrower with income paid in an overseas currency and the number of lenders will be limited further.

This doesn’t mean borrowing is impossible however, just potentially more difficult depending on the exact scenario, and only making an enquiry with an expert is likely to shed light on all your options.

Speak to an expert on foreign income mortgages

If you have questions and want to speak to an expert for the right advice, call 0808 189 2301 or make an online enquiry for a free, no-obligation chat.

We’ll match you with one of the whole-of-market mortgage brokers we work with, ensuring they have experience of helping customers in similar circumstances.

Updated: 2nd November 2020
OnlineMortgageAdvisor 2020 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.