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A Complete Guide to Expat Mortgages

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 13, 2021

If you’re a British expat who wants to buy a property back home or get a mortgage in the country you’ve emigrated to, professional advice is recommended. Not all mortgage lenders consider applications from expats, and those that do are known to hike up their rates.

We’ve put together this guide to expat mortgages to clear up any confusion around them. Here, you’ll learn how expat mortgages work, how much deposit you’ll need to get one, how much you could potentially borrow and more.

What is an expat mortgage and how do they work?

An expat mortgage is a mortgage product aimed specifically at borrowers who are living overseas and want to buy a property in either their country of origin or the one they currently reside in. They can be more difficult to get than standard residential mortgages, as some mortgage lenders see these deals as higher risk.

They work in exactly the same way as a ‘regular’ mortgage, except some of the mortgage lender’s checks and eligibility requirements might be more stringent due to the perceived added risk attached to expat lending.

Expert advice from a specialist broker is recommended if you’re applying for an expat mortgage, as they can boost your chances of approval and help you make sure you get the best interest rate possible. They’ll even give you a hand with the paperwork!

How to get an expat mortgage

Your first step should be to find a mortgage broker who specialises in expat mortgages, as they can guide you through every part of the process from here and offer bespoke advice along the way. We offer a free broker-matching service that will take your needs and circumstances into account to pair you up with your ideal mortgage advisor.

Make an enquiry to get started or read on to find out more about the application process and eligibility criteria for expat mortgages.

Buying property in the UK from overseas

It’s possible to obtain a UK mortgage for an overseas property (under the right circumstances) but there are a number of different requirements that are a little different to obtaining a standard mortgage as a resident. You’ll need…

  • Proof of a job in the UK (preferably a contract)
  • Proof of earnings from an internationally recognised accountant if self-employed
  • Have a clean credit history (more on that later)
  • A mortgage term that does not extend past your 70th birthday

Most lenders prefer expat buyers to hold a UK bank account and some make it a condition of the mortgage.

Mortgages for expats returning to the UK

Returning expats face challenges when it comes to getting a mortgage in the UK, as most providers won’t lend to customers who had no fixed address in Britain during the last three years. Living abroad may also mean their credit history is difficult to trace. There are steps you can take to improve your chances of getting a mortgage upon your return to the UK, if you have the luxury of being able to forward plan. They include…

  • Maintain a UK correspondence address: This could be your parents’ address or that of a family member or close friend.
  • Save up additional deposit: Having additional deposit funds to put down can help offset the risk posed by your expat status. You can read more about expat mortgage deposit requirements in the next section of this article.
  • Keep a UK credit file: One way you can do this is by using an international credit card from a UK provider or maintain a UK bank account from abroad.
  • Have work lined up in the UK: Having worked lined up in the UK when you return will certainly help your chances of securing a mortgage, although you may need to put some time in with your employer before making an application. Some lenders expect six months’ employment history, while others will accept three. If you’re returning to a previous job, your choice of lenders could be wider as this will give you a traceable employment history.

If you’re unable to boost your chances of securing a mortgage by doing the above, don’t panic.

There are specialist expat lenders out there who are more flexible when it comes to lending to the following…

  • Newly returned expats
  • Self-employed expats
  • Retired expats who are returning to the UK
  • Returning expats with bad credit (as long as the credit issue is over 6 years old)

UK mortgages for buying overseas

If you’re a British expat looking to purchase a property in the country you’re currently residing in, the following options may be available…

  • Use a specialist international lender that offers UK mortgages
  • Use a specialist UK mortgage provider that lends overseas
  • Remortgage a UK property to buy overseas
  • Alternately, some British expats may qualify for a mortgage from a local lender in their current country of residence

For more information see our guide to buying property overseas.

Eligibility criteria

Whether purchasing or remortgaging, the criteria is somewhat different for expats. Although remortgaging for expats is a little easier as they have a credit history that can be traced. The key issues facing those looking for expat mortgages in the UK are –

  • Credit history – If you have been overseas for a length of time, then your credit history may be hard to trace by UK lenders. The experienced brokers we work with know which specialist lenders may be willing to offer customers a mortgage despite having bad credit.
  • Income – Lenders deem those who earn their income outside of the UK to be a higher risk and may turn down an applicant if proof of income is difficult.
  • If you’re employed –
    • Lenders prefer applicants who work for an internationally recognised company (although this is not essential)
    • Payslips and other proof of earnings are usually required to be translated into English if necessary.
    • Some lenders may require your income to be paid into a UK bank account.
  • If you’re self-employed –
    • Accountant must be internationally recognised
    • The usual self-employed criteria may apply.

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Expat mortgage deposit requirements

The deposit you will need for an expat mortgage is usually 25% of the property’s value, but this can vary depending on the location and the property type. A select few lenders may require less under the right circumstances.

As far as mortgage lenders are concerned, the more deposit you have, the more likely they are to offer you a mortgage, and the better the rates.

Finding a UK expat mortgage with a 10% deposit is possible, but you’ll need the right advice from one of the whole of market brokers we work with, who may be able to find you a specialist lender who would consider a 90% LTV mortgage for an expat.

Acceptable deposit sources

International anti-money laundering laws require lenders to be very careful about where funds are coming from. If your deposit is in savings or an investment overseas, then justifying or proving where your deposit came from can be difficult if you’re an expat living abroad, as many lenders only accept deposits saved or gifted from a UK source, which can be easily traced to a UK account.

Fortunately many expats keep accounts open back in the UK, but 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 expat remortgages or secured borrowing, to secure a charge against a property you already own).
  • Inheritance – this must actually have gone through probate. Lenders will not consider a will as proof of deposit as they can be changed or the person on the will may not pass on for many years.
  • Gifted deposit. Typically expat lenders would prefer you to have your own deposit, but it may be possible for some to consider a deposit coming from a close relative. Although it may be possible, depending on the circumstances, for a friend or third party to gift deposit, but very few lenders will consider this.

Investment mortgages for expats

The most common type of mortgage we are asked about are residential mortgages for expats, but it’s possible to get an expat mortgage on a property you want to buy as an investment too.

Expat buy to let mortgages

Many expats purchase a buy to let as either an investment or a place to live when they return to the UK. Find out more in our guide to expat buy-to-let mortgages.

Holiday homes

Only a few lenders offer these types of mortgage to UK expats. Both holiday homes and expat lending are each considered niche categories – so when they are combined, specialist advice is an absolute must to ensure you end up with a favourable deal.

The good news is that the brokers we work with know exactly which lenders will consider expat holiday home mortgages and will connect you with the provider best positioned to cater for your needs and circumstances if you make an enquiry. Read more about holiday home mortgages in our standalone guide.

How much can I borrow?

The answer to this question comes down to affordability. How much you earn versus your outgoings. Expat mortgage lenders will also factor in other criteria, such as how much deposit you have and your credit history. Every lender is different and they tend to use their own affordability models based on net disposable income.

They then apply their own cap based on income multiples. So the amount that you can borrow is usually determined by multiplying your annual salary (or salaries if there is more than one of you applying). Most lenders will work on 4-4.5 times income, while some will allow mortgages of up to 5 times income and a few will let you borrow 6 times your income.

Loan to Value (LTV)

The other factor is the loan to value ratio (LTV). This is basically the value of the mortgage you need divided by the value of the property you’re buying, expressed as a percentage.

Most expat mortgage lenders work on an LTV ratio of 75%, while some will go to 85% and a few will offer as high as 90% LTV.

All lenders are different and your credit history can have an affect on what LTV a lender is prepared to offer. Because of this, we recommend you talk to one of the advisors we work with. They specialise in expat mortgages and know exactly which lender is best to approach based on the amount of deposit you have.

Other things to consider

It’s true that buying property overseas is usually more complicated than buying locally, so you’ll need to consider a number of risks and might need to work out how to get a mortgage for a property abroad Here are a few issues you’ll need to consider…

  • Taxation – make sure you account for all the tax you’ll be liable to pay, both in the UK and in the country where you have the property.
  • Ensure the paperwork is correct – make sure that you have all the necessary permissions, licences and planning consents before you sign any form of contract or agreement. Consult a solicitor who knows the local market and speaks the language.
  • Exchange rate changes – even a small change to the exchange rate could drastically affect the value of your purchase. This could make a property – or your mortgage repayments, unaffordable overnight.
  • Language difference – Given the complexity of these types of transactions there’s the increased risk of small but significant details being lost in translation.

Get matched with an expat mortgages expert today

Expat mortgages can be complicated and more risky than standard residential mortgages, but there’s a quick and easy way to tip the odds of a successful outcome in your favour. Speaking to the right mortgage broker before you begin could save you time, money and potential disappointment in the long run.

We offer a free broker-matching service that will pair you with an expert based on your needs and circumstances. This will be a fully-vetted advisor who specialises in expat mortgages and has a deep working relationship with the lenders who offer them.

Call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry and we’ll set up a free, no-obligation chat with you and your ideal expat mortgage broker today.

FAQs

Can I get a UK expat mortgage with 90% LTV?

This is possible, but your choice of approachable lenders might be slim. Most expat lenders offer a loan to value (LTV) ratio of 75%, while some will go to 85% and a few will off as high as 90% LTV. To get a higher LTV mortgage, it will help your cause if you meet all (or at least most) of the lender’s other eligibility requirements.

Are there offset mortgages for expats available?

There are some lenders who offer offset mortgages and these can be an attractive alternative to an interest free or standard repayment mortgage. An offset mortgage allows a borrower to use the savings they have to reduce the amount of interest they pay on their mortgage.

For example, if you have a £200,000 mortgage and £20,000 in savings you will only pay interest on £180,000. You’ll need to keep your savings in an account with the same bank or lender that provides your mortgage.

What happens if the value of the currency goes up or down?

If you’ve taken out a mortgage and you’re making repayments in a foreign currency, the lender must tell you if the exchange rate fluctuates by more than 20%. These rate fluctuations could affect your ability to meet your future mortgage commitments. To protect borrowers, lenders must offer you the option to repay the mortgage in another currency.

Can an expat get a mortgage with bad credit?

Bad credit can have a detrimental affect on your application. It all depends on how long ago the incident was, how severe it was and what the final outcome was. You can find out more about how they can help people getting a mortgage with bad credit. More deposit than usual may be required.

Can an expat get an interest-only expat mortgage?

Yes, there are a few specialist lenders who will offer interest only mortgages to expats and the expert advisors we work with know who they are. An interest only mortgage requires a viable ‘repayment strategy’. This is the plan by which you’ll be able to pay the capital at the end of the loan period.

It should be noted that a repayment or exit strategy is only required for a residential home, not a buy to let, as it is usually assumed by the lender that the sale of the rental property will cover repayment at the end of the loan period.

Are there large expat mortgages available?

Yes, but you will need specialist advice to find them. Mortgage loans that are especially large are usually provided by niche or private lenders, some of whom cater for expats. There are also small expat mortgages available, and they’re often easier to come by.

How long does it take to get an expat mortgage?

This can vary depending on the complexity of the application, but around 4-6 weeks is standard for an expat mortgage deal.

Can you apply for expat mortgages online?

You can kick-start the application process online by making an enquiry . If an online application is your preference, we can connect you to a broker who will carry out the bulk of the process online, and there are also lenders who are happy to work through this channel where appropriate.

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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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