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A Guide to Seafarer Mortgages

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 9, 2021

Getting a mortgage to buy a UK-based property can be a complicated process. This is particularly true for professional seafarers. But, with the right support and advice, it is possible.

From getting your tax affairs in order, to proving your residency, there’s a lot for seafarers to consider when thinking about property finance, and in our complete guide to seafarer mortgages we’ll cover these subjects and more.

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 to standard residential mortgages. They fit in between expatriate and domestic rate mortgages.

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

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 both 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 will need to keep all the evidence relating to your travel and trips to the UK.

But, to be eligible for a non-expatriate mortgage, you will need to 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 due to some finance providers considering the occupation to be higher risk.

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 who specialises in seafarer borrowers will be able to help you organise your affairs and work out what information you need to hand over.

Check whether you’re eligible

The criteria for gaining approval will vary between providers and a specialist broker will be able to 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 sterling. If employed, some mortgage providers require your payslips from the past 3 months and your p60. If self-employed, your 3 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 6 months of the year.
  • Seafarers may have to agree to extra underwriter scrutiny.
  • Applicants must be employed by a UK or international company.

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

The best way to avoid falling afoul of any 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.

You’ll be forgiven for thinking the criteria above is complicated. 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 complete guide to mortgage applications to find out 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 for other types of seafarers.

The information provided in the other sections of this article 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 into offshore limited companies. While this might be a tax-effective solution, it could have serious implications for future property finance.

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

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

Therefore, banking offshore can make it more difficult for you to get a mortgage, but there could still be options for you. See our guide to mortgages based on foreign currency for more information.

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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 who specialise in expat mortgages and they would be more than happy to guide you through the process. See our article on expat mortgages to find out more.

Get matched with a broker who specialises in seafarer mortgages

It is definitely possible for seafarers to secure a mortgage. But, as you can see, it could be a complicated process without a professional on your side to guide you through it.

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

Finding a specialist broker isn’t always easy, but our free broker-matching service can do the hard work for you. After a quick assessment of your exact needs and circumstances, it will set up a free, no-obligation chat between you and a handpicked broker who arranges seafarer mortgages on a regular basis. Call 0808 189 2301 or make an enquiry online to get started.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the 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.

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