Expat Mortgages

What is an expat mortgage?

As an expat – meaning that you reside in a country outside of your native one – you need a special type of mortgage to be able to buy a property in the UK. Although an expat mortgage is similar to a standard mortgage, the eligibility criteria are stricter and you’ll pay a higher rate. This is because your overseas status as a borrower poses more of a risk to the lender.

In fact, many high street lenders don’t provide expat mortgages because your circumstances as an expat can be considered too much of a risk for their lending criteria. The difficulties you may face when approaching lenders can include the fact that you don’t pay tax in the UK, you have a lack of credit score in the UK and you’re possibly paid in a foreign currency.

These barriers can make it harder to secure a mortgage but, don’t worry, it is possible. Our mortgage brokers are adept at dealing with expat mortgage applications, tailoring them to ensure the best chances of success. We work closely with both high street and specialist lenders who offer mortgages to expats. As mentioned above, the rates offered are usually higher than those for standard mortgages but we strive to find the best rate for you depending on your situation.

Types of expat mortgages

There are two types of UK expat mortgages available — one for a main residence and one for a buy-to-let property.

Main residence

You may be planning to move back to the UK and want to buy a home in readiness for that move. Another scenario may be that your family members still live in the UK while you’re overseas. You may wish to buy a home for them and this also provides you with a home on your return to the UK.

Buy-to-let property

If you already own a home in the UK, you can remortgage it to a buy-to-let mortgage for expats. Letting your property is a good way to cover your mortgage payments and ensure that the property is maintained until you’re ready to return to the UK. If you have no intention of moving back to the UK, keeping your property and renting it out is a good long-term investment.

Even if you don’t own a home when you move abroad, you may want to buy a property in the UK solely for investment purposes. Taking advantage of the growing rental sector, you can not only receive a rental income but potentially benefit from an increase in the property’s value.

Your eligibility for an expat mortgage

As with any mortgage, you need to satisfy the lender’s affordability criteria. As mentioned earlier, this is stricter for expat mortgages. Your loan requirements, country of residence and personal circumstances can all affect your eligibility. The application process for an expat mortgage can be complicated and our skilled brokers will be on hand to help you with this every step of the way.

Why is it harder to obtain an expat mortgage?

There are various reasons why applying for an expat mortgage can be complicated. Living overseas, your income is likely to be paid in a foreign currency and the fluctuating exchange rates have to be taken into account during the affordability calculations. If you’re employed, lenders usually prefer you to work for a multi-national company. If you’re self-employed, you must use the services of an accountant who is internationally recognised. You may also have a lack of credit history in the UK, depending on how long you’ve lived abroad. Your country of residence is also an important factor. Lenders generally favour certain countries over others when considering overseas borrowers. This can be due to differing employment laws and tax legislation, for example.

Your expat mortgage deposit

Generally, you’re expected to pay 25% for your expat mortgage deposit. The amount required depends on the lender, the property type, the property’s location and your circumstances. Paying a bigger deposit will strengthen your position as this lowers the level of risk for the lender. The more you can pay, the more mortgage options will become available to you and the better the rates.

Some lenders may be willing to accept a lower deposit amount. If you’re struggling to save a 25% deposit, don’t hesitate to speak with one of our mortgage brokers. We work closely with specialist expat mortgage lenders who offer more flexibility than high street lenders. They may be prepared to offer you a loan-to-value (LTV) ratio of 90% depending on your circumstances. This means that you would only need to pay a 10% deposit.

One aspect that lenders must adhere to is complying with anti-money laundering laws. As such, you have to provide proof of where the funds originated from. Some lenders only approve deposits that have a UK origin, such as savings held in a UK account. Generally, the deposit sources that are approved include:

• Equity in a property (either to allow a remortgage or via the sale of the property)
• Savings
• A gifted deposit
• Investments
• An inheritance

We can help with your eligibility for a UK expat mortgage

Our expert mortgage brokers, located throughout Kent, London and Edinburgh, are used to dealing with complex expat scenarios and will tailor your application for the best outcome. We work with specialist lenders offering expat mortgages to self-employed borrowers, first-time buyers, those without a UK footprint, borrowers with bad credit issues and those earning an income in multiple currencies. Give us a call on 01322 907 000 to discuss your circumstances with one of our mortgage specialists. Alternatively, send us an email at info@trinityfinance.co.uk or an enquiry via our contact form. We will reply to you as quickly as possible to ascertain your eligibility for an expat mortgage.

How much can you borrow with an expat mortgage?

Your affordability determines how much you can borrow for your mortgage loan. Your income and expenditure are taken into account as well as the size of the deposit you can pay. An income multiplier is used, which can range between 3.5 and 6 times your annual salary. If you’re applying for a buy-to-let expat mortgage, the anticipated rental income is also included in the affordability calculations.

Each lender has its own criteria but other factors taken into account can include any outstanding debts you may have, your credit history, your employment history and the number of dependants you have. Another factor is the maximum LTV the lender is prepared to offer for an expat mortgage. Whilst the majority agree to an LTV of 75%, some offer higher LTVs, such as 85% or 90%. Your dedicated mortgage broker will discuss your financial position in detail with you to ascertain how much you can borrow. They will ensure that the right lender is approached on your behalf to secure the best expat mortgage for your needs.

How to improve your chances for a successful application

As well as being able to pay a deposit, you need to provide proof of your earnings and meet the lender’s criteria, just as you would for a standard mortgage application. However, living abroad makes it much harder for lenders to carry out some of their normal affordability and credit checks. To help increase your chances of approval for an expat mortgage, there are a few things you can do:

• Have adequate proof of earnings. If you’re employed, you’ll need to provide payslips that cover a specified period. As mentioned earlier, it will go in your favour if you work for a multi-national company. If you’re self-employed, you must use an internationally recognised accountant and provide accounts that date back a specified number of years.
• Have your income paid into a UK bank account. Whilst this isn’t essential, it makes it easier to prove your income and is preferred by some lenders.
• Keep a good credit rating. The stronger your credit history, the better your likelihood of being offered better mortgage deals with more competitive rates. It’s not a necessity to have a UK credit rating to apply for an expat mortgage so don’t worry if you’ve lived abroad for a long time.
• Retain a financial link with the UK. Keeping a credit card or being associated with a residential address in the UK, such as a parent’s address, helps lenders check your financial footprint.
• Have the right paperwork. Living overseas makes it much harder for lenders to carry out their checks so you’ll be required to provide a lot of paperwork. It’s best to gather this together right at the start to avoid your application being rejected at a later stage. Your dedicated mortgage broker will go through this with you before you apply for an expat mortgage.
• Let us approach lenders on your behalf. Our mortgage brokers are highly experienced at dealing with expat mortgages. They will tailor-make your application to ensure that it meets the required criteria and search for the best expat mortgage deals available. With access to mortgage products that lenders only offer to brokers, you’ll benefit from a wider range than if you approach lenders yourself.

Mortgage issues you may face as an expat moving back to the UK

Obtaining an expat mortgage for a UK property when you’re living abroad is one thing. But what happens when you need to return to the UK and apply for a mortgage having lived abroad for a number of years? When returning to the UK, your expat status may pose a few problems if you need to secure a mortgage. Many lenders won’t offer loans to those without a fixed address in the UK for the past 3 years. You may also have a lack of credit history due to living abroad. As well as following some of the steps mentioned above, there are ways to prepare in advance to boost your chances of being offered a mortgage.

• Save a bigger deposit. The more you can pay as a deposit, the less risk you pose for the lender.
• Maintain a credit link with the UK. For example, keep a UK bank account open while you’re living abroad or use a credit card that was supplied by a UK provider.
• Have a job arranged in the UK. It’s best if you have already started working in the UK before applying for a mortgage. Some lenders insist that you’ve been employed in the UK for 6 months while others will consider 3 months’ employment history. If you’re returning to the same job that you had when you left the UK, the lender can easily trace your employment history. If you have a new job lined up but haven’t started it at the point you apply for a mortgage, don’t be disheartened. Our mortgage brokers will approach a specialist lender offering more flexible criteria so that your mortgage application can be approved. This will be on the basis of your projected income and you’ll need to provide supporting documentation for this.

We can help with your expat property finance needs

Our experienced mortgage brokers are on hand to discuss your circumstances abroad and your needs for an expat mortgage. They are used to dealing with complex situations and will strive to make the process as straightforward as possible. At Trinity Finance, we have access to mortgage products that aren’t available publicly. This means our specialist brokers can also ensure that you’re offered the best deal available to suit your requirements.

We understand that you live in a different time zone and are happy to arrange your mortgage or remortgage while working around your schedule. Our expat mortgage brokers are available to discuss the progress of your application via telephone, Skype or Zoom or can communicate via email if you prefer. To get started, give us a call on 01322 907 000 or send your details to us at info@trinityfinance.co.uk or via our contact form.

If you’re a UK resident and wish to buy or refinance a property abroad, you need an overseas mortgage. Whilst we cannot arrange this type of mortgage for you ourselves, we can refer you to a third party that can.