FREE Offshore Mortgages Advice
“We know that time is precious for you, we can work around your availability while searching for the most competitive mortgage products and overseeing your mortgage application from start to finish”.
Jonathan Smith – (CeMAP, BA Hons, Aff SWW, CeRER)
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If you’re living overseas and want to buy or remortgage a property in the UK, you need to arrange an offshore mortgage. As a niche mortgage, this is offered by private banks and specialist lenders. They provide flexibility with their lending criteria and terms, taking your unique circumstances into account. They are well-versed in handling complex income structures and provide bespoke mortgage solutions when you’re buying UK property from abroad.
At Trinity Finance, we have formed strong relationships with private banks and specialist lenders dealing with offshore mortgages. We’ll approach the one most suited to handling your application based on your circumstances and requirements so that you benefit from a tailored lending solution. In this guide, we’ll explain what an offshore mortgage is, the benefits of having one and the eligibility criteria.
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What is an offshore mortgage?
An offshore mortgage enables a borrower who’s living overseas to buy or remortgage a UK property. This is ideal for you, therefore, if you’re not resident in the UK for tax purposes – either as a UK expat or a foreign national – or have an income that’s predominantly earned outside the UK. This type of mortgage allows for your complex income arrangements and possible lack of credit history in the UK. The interest rates for this type of mortgage are usually higher as it’s more complex to arrange. The different currencies have to be allowed for as well as additional legal documentation and the lack of UK credit history. You can arrange an offshore mortgage on a short or long-term basis to suit your needs.
What types of property can you buy with an offshore mortgage?
Offshore mortgages are usually used to purchase a residential property or a buy-to-let investment property in the UK.
Offshore residential mortgages
Typically, offshore mortgages are used to finance residential UK property purchases. When you’re living abroad, you may want to buy a home for you or your family to stay in each time you visit the UK, for example. This ensures that you always have a base to go to and don’t have to find short-term accommodation for every trip to the UK. It also saves you from having to pay expensive hotel costs.
An offshore buy-to-let mortgage
Another reason to use an offshore mortgage is to finance the purchase of an investment property. With an offshore buy-to-let mortgage, you can buy a property to rent out in the UK while you’re domiciled abroad. Receiving a rental income from a UK investment property makes good financial sense if you live overseas for most of the year.
Eligibility criteria for an offshore mortgage
As mentioned earlier, the eligibility criteria set by private banks and specialist lenders are more flexible when it comes to offshore mortgages. A more personal approach is taken when assessing your application. These lenders understand that you may have a complex income structure. For this reason, they take your assets into account as well as your earnings. They also realise that you may have a lack of credit history in the UK, especially if you’ve lived abroad for more than 3 years. These factors are allowed for in their underwriting processes.
You can apply for an offshore mortgage as an individual or via a limited company or an offshore trust. Your reason for buying the property – as a home or a buy-to-let investment – is taken into account as well as your age, occupation and circumstances. You can arrange your offshore mortgage in sterling or another currency if you prefer. For example, if you’re buying a UK home with an offshore residential mortgage, it may make more sense to arrange the mortgage in the same currency as your earnings. However, if you’re buying an investment property with an offshore buy-to-let mortgage, you’ll be receiving a rental income in sterling. In this case, it will be more beneficial to arrange the mortgage in sterling.
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Get expert offshore mortgage advice
As offshore mortgages are complex in nature, they’re arranged on a case-by-case basis. Our mortgage brokers – located throughout Kent, London and Edinburgh – will assess your situation and personalise your application before approaching a niche lender. The offshore mortgage will then be tailored to your specific needs and circumstances.
For specialist mortgage advice about buying or remortgaging a UK property when living overseas, just give us a call on 01322 907 000. Alternatively, send us an email at info@trinityfinance.co.uk or an enquiry via our contact form. Our mortgage brokers understand your need for flexibility when living in a different time zone. They can work around your schedule and are available via different forms of communication if you prefer.
How much can you borrow for an offshore mortgage?
When assessing how much you can borrow, offshore mortgage providers consider your earnings from different sources as well as your assets. Each one has its own criteria and some may, for example, use multipliers of up to 5.5 times your income.
Generally, offshore residential mortgages are offered with a loan-to-value (LTV) ratio of up to 75%. Some lenders may provide a higher LTV depending on your circumstances and the country you reside in. If you have an adverse credit history, you may have to pay a larger deposit and be charged a higher interest rate. It may be possible to secure 100% of the funding you need via some private banks and specialist lenders by using back-to-back loans. This entails cash and other assets, such as shares, being deposited with offshore banks. Our offshore mortgage brokers will discuss your earnings and assets with you to ascertain your borrowing potential.
The benefits of offshore mortgages
Whether you’re domiciled abroad, are a foreign national or your income is largely comprised of different currencies, you can buy or remortgage a property in the UK using an offshore mortgage. This niche type of mortgage offers many benefits that you can take advantage of, as detailed below.
- Your earnings from different sources as well as your worldwide assets are taken into account.
- You can secure an offshore mortgage even if you have a lack of credit history in the UK. This is likely if you’ve lived abroad for more than 3 years.
- You can apply as an individual or via a limited company or an offshore trust.
- An offshore residential mortgage enables you to buy a home for you or your family to stay in. This is ideal if you travel to the UK frequently.
- An offshore buy-to-let mortgage enables you to buy an investment property. This allows you to earn an income in the UK while living overseas.
- You can choose which currency you prefer your offshore mortgage to be in.
- Using back-to-back loans, you may be able to secure a 100% offshore mortgage.
- Offshore mortgages can be tax-effective in some cases. Make sure that you seek professional tax advice before you proceed with this type of mortgage.
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Considerations when applying for an offshore mortgage
There are various issues to think about if you’re buying or remortgaging a UK property when living in another country. These include the tax implications, fluctuations in the exchange rate and the legal aspect of the transaction.
Tax implications
In some circumstances, offshore mortgage loans can be tax-effective. Due to the complex nature of offshore mortgages and any legal tax changes that may occur, it’s essential to get up-to-date advice from a tax expert. This ensures that you avoid any unforeseen consequences if any oversights are made.
Exchange rate fluctuations
Fluctuations in the exchange rate, even small ones, can have a huge impact on your finances. They can drastically affect the property’s value as well as the amount you have to pay for your mortgage each month. As a result, your lender will be obligated to advise you if there is more than a 20% change in the exchange rate. That way, you can decide if you prefer to make your mortgage repayments in a different currency.
Legal documentation
Buying a property with an offshore mortgage involves more legal paperwork than a transaction that’s carried out in the same country. It’s essential to read through all of the documentation to make sure that everything is correct. Ask your solicitor to check the legal paperwork thoroughly on your behalf as they may notice issues that you don’t.
Finance your UK property purchase with an offshore mortgage
Our mortgage brokers – based throughout Kent, London and Edinburgh – are ready to arrange your offshore mortgage. Just give us a call on 01322 907 000 and they’ll advise you on all of the documentation needed to proceed with your application. This will be presented to the niche lender most suited to your case and your dedicated mortgage broker will negotiate for the best offshore mortgage rates on your behalf.
At Trinity Finance, we can also help with other aspects relating to your purchase, such as arranging your insurance cover. For more information, send an email to us at info@trinityfinance.co.uk or an enquiry via our contact form. One of our mortgage and protection consultants will reply to you as quickly as possible with further details.
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FAQs
What’s the difference between an offshore mortgage and an overseas mortgage?
With an offshore mortgage, you’re classed as an offshore entity for borrowing purposes when it comes to buying or remortgaging a property in the UK. This means that you live overseas, are a foreign national or most of your income is earned outside of the UK.
An overseas mortgage, however, enables you to buy a property outside of the UK. You may want to have a holiday home abroad, for example. Or you may want to buy a home overseas in readiness for your retirement. You can arrange an overseas mortgage via a UK lender or an overseas lender. Alternatively, you can remortgage your UK property to finance the purchase abroad.
Will a credit check be carried out on you for an offshore mortgage?
No, offshore mortgage providers understand that you may have a lack of credit history in the UK. This is especially the case if you’ve lived abroad for more than 3 years. After this period, finance companies are unable to carry out a credit check via a credit reference agency, such as TransUnion, Experian or Equifax. As a result, offshore lenders cater for this with their application and underwriting processes. These processes do not require you to have a UK credit history.
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