Pete Mugleston | Mortgage AdvisorPete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.
Updated: 3rd July 2019* | Published: 28th June 2019
We get many enquiries from British expatriates who are living abroad but wish to remortgage a property in the UK. However, we also often help expats who wish to remortgage a home in their new country of residence, or another country entirely.
Whatever kind of expat remortgage you need, we work with expert advisors who can generally help to find the finance you need, for properties in the UK and abroad.
As you might perhaps expect, it’s slightly easier for a UK expat to obtain an expat remortgage on property in the UK than it is to get one on property abroad.
Having said that, these products are feasible in most circumstances - income and credit history permitting - as long as you talk to experts who have the specialist knowledge you need.
So in this article we’ll be discussing the most important things to know about when you’re refinancing a property as an expat including:
Expat remortgages are generally easier for British expatriates to arrange on properties in the UK. That holds true whether you wish to have a home here for your own occasional use, retain as or convert your property to buy-to-let, or simply want to keep owning a property in the UK to make sure you aren’t left behind by the UK property market.
Can I remortgage if I live abroad?
Yes, this could be possible!
Expat remortgages on properties in the UK are actually easier to arrange than new mortgages, as in most cases you will have an up-to-date credit history. This is a big help when the specialist advisors we partner with are trying to find the best available rates for you.
However, if you don’t have a traceable UK credit history – or perhaps have one that is less than perfect – specialist help may be needed to help you find an expat remortgage at the best rate for your personal circumstances.
Are there Expat remortgages for properties abroad?
You should expect remortgaging a property outside the UK to be a bit more complex than doing so with property here. Even though the experts we work with have a broad experience of arranging expat remortgages, you really do need to make sure you fully understand the tax and legal complications that can arise from a UK citizen owning property abroad.
In terms of tax, you’ll need to make sure you understand in advance all of the taxes you’ll be liable to pay, both in the UK and the country where you own the property
Paperwork can also raise problems for the unwary abroad, especially if it’s in another language. So, it’s essential that you and your legal representatives ensure the property has all of the necessary permissions, licences and planning consents in place
Exchange rates are another big consideration. Even relatively small changes to the exchange rate could make your mortgage repayments unaffordable overnight. That’s why many people remortgaging as an expat prefer to borrow in the currency in which they are paid. If you have a mortgage where your repayments are made in a foreign currency, the lender must inform you whenever the exchange rate fluctuates by more than 20%.
Above all, bear in mind that to protect borrowers, lenders must offer the option of repaying the mortgage in another currency; a fact that can be a life-saver in certain circumstances.
Whether you are an expat seeking an expat remortgage on property in the UK or abroad, you can only work within the loan-to-value (LTV) and income criteria of the country your loan is coming from.
These can vary widely when you’re dealing with lenders abroad, where maximum LTV ranges from 60% to 90%, depending on the country you’re looking to buy in. Lenders in other countries also have an equally wide range of income criteria. Having said that, it’s common across most EU countries for lenders to base the amount they will lend on around 33% of your disposable income, whether you are an expat or not.
This can offer you a little less leeway than the traditional measure of gross income multiples that you will still find in the UK; but the experts we work with will always strive to help you find the most advantageous lending criteria when buying property abroad.
It is also worth bearing in mind that the most common reasons for expat remortgage applications to be turned down are income-related. That’s simply because some lenders consider people who earn their income overseas to be a higher risk than those who stay in the UK.
Naturally, this is annoying and unhelpful when you need an expat remortgage, but the experts we work with can often direct your application to a specialist lender where this is the case.
Can I get an expat remortgage if I have bad credit?
That’s because your UK credit score depends on you being able to demonstrate a regular pattern of having credit and managing it properly.
So while you might reasonably assume that if you haven’t had any loans or credit cards to repay in the UK, then your UK credit score will be perfect, that isn’t actually the case.
In fact, the people with the highest credit scores are those who regularly use credit cards and personal loans, and have therefore had the chance to demonstrate a record of making repayments on time.
This means that when you’re looking for an expat remortgage, UK credit scoring practices mean you should have a fairly healthy credit profile, as long as you’ve been making your repayments on time.
How does employment situation affectexpat remortgages?
There are some subtle differences between how lenders look at employed and self-employed expats when it comes to expat remortgage applications.
If you’re in regular employment abroad, the usual criteria for an expat remortgage is to have:
A minimum income equivalent to £25,000
Employment with an internationally-recognised business; though not all lenders demand this
References and payslips that are written in or translated into English: though again, some lenders will waive this rule
Income that is paid directly into a UK account; although some lenders will accept salaries that are first paid into banks abroad, subject to sight of bank statements
What if I’m self employed?
If you’re a self-employed expat, all of the above criteria apply, you just need to make sure that your accountant’s qualifications are internationally recognised. In addition to this, you should also be able to produce at least three years’ certified accounts to prove that your self-employed income is stable.
Conversely, if you don’t already own another property in the UK, the loan-to-value requirements can be more stringent, and some lenders will insist on equity of at least 35% in these cases. However, the experts we work with will always try to find you a loan that works with your available equity.
Buy-to-let expat remortgages
If you intend to remain abroad but want to have an expat remortgage on a buy-to-let property in the UK, the process and criteria are slightly different than for people who are resident in the UK.
So if you’re an expat seeking a buy-to-let remortgage in the UK, you will, first and foremost, have to provide evidence of a contract of employment with a UK employer. However, if you’re self-employed, most lenders will accept three years of certified accounts, as long as your accountant holds internationally-recognised qualifications.
In addition to this, most buy-to-let expat remortgages will depend on you:
Having a clean, traceable UK credit history
Choosing a mortgage term that means the loan will be repaid before you turn 70
It’s also worth knowing that many lenders for expat buy-to-let remortgages will also take your level of experience as a landlord into account. After all, someone who is relatively new to letting and also lives abroad will generally make lenders more nervous than someone who already understands all of the pitfalls, but that isn’t to say there are no-lenders for first-time investors.
Do I need a deposit to get an expat remortgage?
Not usually, as any equity you hold in your property can serve as the deposit. That said, a remortgage is an opportunity to put more money into your home to reduce the loan to value (LTV) ratio. With expat remortgages, there are rules about where this capital can come from.
Acceptable sources include...
Savings in a UK or overseas bank account
Investments in the form of stocks, shares or other capital assets held in the UK or abroad
From the sale of a property in the UK or overseas
From equity held in another property. This is usually easier if the property is in the UK, as many lenders enable you to secure new borrowing against a property you already own, though some lenders will accept property owned abroad
Gifted deposit from a friend or relative
The importance of having a UK bank account if you’re applying for an expat remortgage
Even if you are a long-term or permanent expat, the majority of lenders look more favourably on expat remortgage applications from people who still hold a UK bank account.
So if you still have a UK bank account, it’s worth keeping it open, as expat remortgages are far easier to obtain when you have one.
And if you don’t still have a UK bank account, it’s worth opening one and making regular payments into it, should you think that you might ever want an expat remortgage.
Still have questions about expat mortgages?
Arranging an expat remortgage may not be quite as simple as arranging one if you’re still resident in the UK, but it is usually achievable if you can talk to the right experts.
So feel free to call Online Mortgage Advisor for a chat on 0800 304 7880 or send us an online enquiry here.
Once you’ve done that, it’s time to put your feet up while we do the legwork: finding the right expat remortgage expert for your needs. It’s worry-free too, as we will never charge you a fee or carry out a search that leaves a footprint on your all-important credit rating.
So if you’re still asking yourself: “Can I remortgage if I live abroad?”, the advisors we work with are on hand to provide the answer and guide you through the process.
*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 info 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.
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 here...