What is an Expat Mortgage?
Expat mortgages are specific products designed for applicants living abroad - either mortgaging a domestic property whilst living overseas or investing in a property in another state.
This type of lending is typically more complex and difficult to source than a residential mortgage, given the higher risk and specialist nature of expat mortgages.
How Do the Best Expat Mortgages Work?
Mortgages for expats work just the same way as any other mortgage.
The differences appear in the application process, and the stricter eligibility requirements due to the need for the lender to mitigate the higher risk.
Can I Get a UK Mortgage as an Expat?
You can, yes - most Revolution Brokers expat clients are UK nationals wanting to buy a British property while living overseas. Alternatively, we help overseas citizens wanting to mortgage a local property.
Either scenario has its complications, but as an experienced international broker, the Revolution Brokers team is on hand to assist.
Can I Get a UK Mortgage as an Expat to Buy a British Property?
With the support of a broker, it is certainly possible to buy a property in the UK from overseas; however, the criterion from lenders is likely to vary a little:
- You must be in employment, and usually need a contract to demonstrate this, or
- You'll need to prove your earnings, using an accountant with an internationally recognised accountant to certify your filed accounts if you are self-employed.
- You will usually need a clean credit history.
- The mortgage term should end before you reach age 70.
- Ideally, you'll have a UK bank account - some lenders make this mandatory.
Can I Get a UK Mortgage as an Expat From an Overseas Lender?
The first step is to contact a whole-of-market broker. Using a bank or provider may mean missing out on some of the best expat mortgage offers, which are often available through off-market specialist lenders.
Contact Revolution Brokers on 0330 304 3040 - our team will schedule a convenient time for a chat with one of our expat mortgage specialists. When they know a little more about you, and what lending you need, they will begin a search of every lender and product on the market to make an independent recommendation about the best expat mortgages for you.
What Do Lenders Look For in Expat Mortgage Eligibility?
The criteria for the best expat mortgages will depend on whether you are mortgaging or remortgaging.
If you are remortgaging, the criteria might be slightly relaxed, since an existing UK mortgage likely means you have built up a credit history.
Primary criteria include:
- Credit Rating: this can be an obstacle for expats who have been abroad for some time, as without a credit rating, it can be hard to find a UK lender. If you have adverse credit, our team can advise on bad credit lenders who have the best expat mortgages for low credit applicants.
- Income: If you are employed, some lenders will only accept applicants working on a contract for an internationally recognised company. You'll need to supply payslips and/or bank statements to prove your income, and some mainstream lenders only consider income paid to a UK bank account.
- Self-employment: For self-employed applicants, you will need to provide up to three years of accounts and have these verified by an accountant with an internationally recognised qualification.
Are There Different Types of Expat Mortgage?
Most expat mortgages are residential - i.e. an expat relocating back to the UK and wanting to purchase a home, or new expats searching for a mortgage to buy an overseas property. However, the best expat mortgages may depend on your circumstances and requirements.
Can I Get a UK Mortgage as an Expat for a Buy to Let Investment?
You can - many expats either keep a UK property and switch to a buy to let mortgage as an ongoing investment or retain an overseas property and rent it out when they return to the UK.
Can I Get a UK Mortgage as an Expat for a Holiday Home?
Holiday home mortgages are more unusual and require a specialist lender. This is a further niche within the expat mortgage sector, and so you must use an expert broker to ensure you have the leverage to negotiate a competitive offer for the best expat mortgages for holiday lets.
Can I Get a UK Mortgage as an Expat Due to Relocate Back to the UK?
Usually, you’ll need a specialist lender to find the best expat mortgages prior to a relocation, as most mainstream lenders will not consider applicants who are unable to provide a fixed UK address over the last three years.
You may also find that you have little or no credit history if you have been abroad for some time, which can make it trickier to find a lender.
There are a few steps you can take to strengthen your eligibility for the best expat mortgages as a returning expat:
- Keep an address in the UK for correspondence, such as through a family member.
- Provide as much deposit as you can - the higher the deposit, the lower the risk, and the better your chances of finding a lender.
- Maintain a UK credit file by using a UK credit card or British bank account from time to time.
- Demonstrate a viable employment status on your return to the UK, which may improve your prospects rather than having no work lined up.
Even where these options are not possible, Revolution Brokers can recommend lenders for expats who are returning to the UK, self-employed, and returning on retirement, or those who have experienced negative credit issues, usually most achievable if these are over six years ago.
What Deposit Do I Need for an Expat Mortgage If I'm Coming Back to the UK?
Generally, a lender will ask for a 25% deposit against the best expat mortgages but this can change significantly.
If you have a 10% deposit, you can find 90% LTV deals, but these are unusual and only available through experienced brokers who can negotiate the terms with the lender.
Can I Get a UK Mortgage as an Expat With Any Deposit Source?
Money laundering regulations mean that lenders can only accept mortgage deposits from verifiable income sources.
The most commonly approved deposit sources, which will be necessary to qualify for the best expat mortgages include:
- UK or international savings
- Investments either in the UK or overseas
- Property sale proceeds
- Equity held in an existing property
- Capital inheritances
- Gifts from family - depending on how close the relationship.
Can I Get a UK Mortgage as an Expat to Buy an Overseas Property?
If you are a UK national wanting a mortgage to purchase an overseas property, you can choose from a few options:
- Find an international mortgage lender offering UK mortgage products.
- Apply to a UK mortgage provider who offers overseas mortgages.
- Source a mortgage lender in your new country of residence.
Can I Get a UK Mortgage as an Expat for Any Value?
The largest expat mortgage you can get depends on your income, credit history, and the value of deposit available – but the best expat mortgages may have more rigorous criteria.
Each lender uses its own affordability calculation, usually taking your net income as a starting point and multiplying this by a fixed amount.
Lenders also place caps on the maximum they can lend, also calculated as a multiple of your average net income.
Typically, this cap is based on between 4 - 4.5 times your annual income, with some lenders extending the multiple up to five or even six times.
The below table illustrates the different calculations used by different lenders, and how this might impact the maximum you can apply for on an expat mortgage:
|
Annual Income
|
Maximum mortgage from a lender with a 4 x cap
|
Maximum mortgage from a lender with a 5 x cap
|
Maximum mortgage from a lender with a 6 x cap
|
|
£35,000
|
£140,000
|
£175,000
|
£210,000
|
|
£40,000
|
£160,000
|
£200,000
|
£240,000
|
|
£45,000
|
£180,000
|
£225,000
|
£270,000
|
|
£50,000
|
£200,000
|
£250,000
|
£300,000
|
|
£55,000
|
£220,000
|
£275,000
|
£330,000
|
|
£60,000
|
£240,000
|
£300,000
|
£360,000
|
|
£65,000
|
£260,000
|
£325,000
|
£390,000
|
|
£70,000
|
£280,000
|
£350,000
|
£420,000
|
This table illustrates the importance of using a broker to ensure you apply to the lenders offering the best expat mortgages - the same expat, with the same income, might see as much as a £140,000 difference in the maximum they can borrow, from two different lenders.
What Loan to Value Ratio Can I Borrow Up to on the Best Expat Mortgages?
Loan to value means the amount you wish to borrow as a proportion of the value of the property. Typically a lender will offer up to 75% LTV - so for a £100,000 property, they will lend you up to £75,000.
Other lenders offer LTVs up to 85%, with specialists offering mortgages as high as 90% LTV, depending on the circumstances.
What Other Eligibility Factors Apply to Expat Mortgages?
There are different risks and costs associated with purchasing overseas property, and you should always make sure you are fully versed in the costs before proceeding with a mortgage application.
Expat considerations and costs include:
- The tax implications - depending on your tax residency status, you could be liable to pay tax in two countries, so need to understand the double-tax treaties in play and how to proceed.
- Paperwork must be letter-perfect - you may need licences, permissions and consents before taking out overseas lending, so will need a competent solicitor experienced in cross border transactions.
- Exchange rates present a risk, with fluctuations potentially making a significant difference to your repayments.
- Language barriers can also cause issues, so it is essential to use reliable professionals or have all documents translated before signing.
