Seafarer Mortgages Explained

In this article, we’ll explain how to get a mortgage if you’re a professional seafarer, the specific eligibility criteria, and why speaking to a mortgage broker is a vital first step in the process.

What is a seafarer mortgage?

A seafarer mortgage is a type of property finance designed to meet the specific needs and requirements of people who work in this profession. UK seafarer mortgages differ only slightly from standard residential mortgages. They fit in between an expat and a domestic mortgage.

In 2012, seafarers’ unions negotiated a unique tax provision with HMRC. This allows seafarers to claim a complete exemption on their foreign earnings, HMRC’s Seafarers Earnings Deduction (SED).

This was agreed upon because seafarers spend significant periods outside the UK and don’t use many of the services their taxes would pay for. They also work in a very competitive labour market.

Who Classifies as a Seafarer?

A seafarer is anyone who works on a ‘seagoing ship’.

This would include:

• Master and crew
• Self-employed contractors
• Shop employees and entertainers

A seagoing ship is any vessel:

• On an international voyage or from a foreign port
• On a domestic journey from a UK port
• Over 500 gross tonnes

How claiming the SED affects your mortgage prospects

Seafarers’ earnings may be paid tax-free in a foreign currency, but they should still complete an annual UK tax return where they can claim the SED exemption. This will keep UK residency and eligibility for a non-expatriate UK mortgage.

Reassuring a mortgage lender and the tax office that you’re eligible for this treatment can be tricky.

If you don’t spend more than half the year (183 days) in the UK during a tax year, you must keep all the evidence relating to your travel and trips to the UK. But, to be eligible for a non-expatriate mortgage, you must demonstrate that you have a home in the UK, where you can stay for 91 days continuously, which is your postal address and where you’re registered to vote.

Insurance costs to factor in

One issue seafarers face once they’re on the property ladder is the higher cost of home insurance. If your house is unoccupied for long periods of time, your insurance could be invalidated. A specialist broker can help you avoid this pitfall, assuming you can offer evidence of nearby family or friends who can check on your property regularly while you’re away.

Other types of insurance, such as life insurance and critical illness cover, can also be higher for seafarers because some finance providers consider the occupation to be more risky.

How to get a seafarer mortgage

Seafarers will have to do things slightly differently to other mortgage customers. Getting all your income and tax information together is very important. You may also need to prove your residency.

A mortgage broker specialising in seafarer borrowers will be able to help you organise your affairs and work out what information you need to hand over. If you make an enquiry, we can arrange for a specialist advisor with experience assisting people in this profession to contact you immediately.

Check whether you’re eligible

The criteria for gaining approval will vary between providers, and a specialist broker can advise you more specifically on what’s required.

Some mortgage lenders have the following criteria for seafarers:

• The applicant must be domiciled in the UK for tax purposes – even if they are using the seafarers’ allowance to offset tax on their seafarer income.
• Income must be paid and received in pounds sterling. If employed, some mortgage providers require your payslips from the past three months and your P60. If self-employed, your three most recent tax calculations and overviews may be required.
• Applicants must have the permanent right to reside in the UK.
• Applicants must live in the UK for six months of the year.
• Seafarers may have to agree to extra underwriter scrutiny.
• A UK or international company must employ applicants.

It’s worth noting that lenders will assess seafarer applications on a case-by-case basis, so the caveats mentioned above may not apply to you.

The best way to avoid lender restrictions is to speak to a broker who specialises in seafarer mortgages. They will know exactly which lender is best positioned to approve your application.

Speaking to a mortgage broker who specialises in seafarers and understands their needs should help simplify the process for you. You might also wish to read through our comprehensive article on mortgage applications to determine how your general creditworthiness will be assessed, what documents you’ll need and more.

What if you’re a yacht crew member?

In general, there are no specific differences between mortgages for yacht crew members and other types of seafarers.

The information provided in the other sections of this page is relevant to all seafarers, regardless of specific occupation and the type of vessel they’re based on.

However, some yacht crew members choose to have their foreign currency salaries paid to offshore limited companies. While this might be a tax-effective solution, it could seriously affect future property finance.

Rather than keeping your tax-free earnings out of the sight of the UK tax authorities, using an offshore bank account can attract more attention from HMRC.

Additionally, offshore accounts charge higher fees, don’t pay interest, or offer lending facilities. They also don’t contribute to your UK credit rating.

Therefore, banking offshore can make getting a mortgage more difficult, but there could still be options. For more information, see our in-depth article on mortgages based on foreign currency.

Expatriate mortgages vs domestic seafarer mortgages

The main difference between expatriate and domestic mortgages is the cost and the extra checks the lender will carry out before they approve your application.

Interest rates can be higher on expat mortgages, and some lenders are reluctant to offer finance under these circumstances as the level of risk is generally considered higher. If overseas customers default on their mortgage, they could disappear more easily. It’s also more difficult for lenders to confirm a non-UK resident’s income and tax status.

Seafarer customers who only qualify for an expatriate mortgage can still apply. We work with brokers specialising in expat mortgages, and they would be more than happy to guide you through the process.

Get matched with a broker who specialises in seafarer mortgages

Seafarers can secure a mortgage, but it could be complicated without a professional to guide you through it.

Navigating the exact criteria required, ensuring you have the correct tax status, and choosing the right provider can be difficult. This is why it is highly recommended that you speak to a mortgage broker who specialises in arranging finance for seafarers.

Finding a specialist broker isn’t always easy, but our broker-matching service can do your hard work. After a quick assessment of your exact needs and circumstances, it will set up a no-obligation chat between you and a handpicked broker who arranges seafarer mortgages regularly. Call 0330 818 7026 or enquire online to get started.