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UK Mortgages for expats and non-residents

An overview of UK mortgages for expats, including how to increase your eligibility for the best expat mortgages in the UK

Last updated 20 July 2021 at 11:01

People living outside of the UK and looking for a UK mortgages have over recent years found it increasingly tough to obtain a mortgage as UK lenders continue to tighten their borrowing requirements. This has ultimately meant that specialist assistance is often required to secure a UK mortgage to buy a UK property.

Some UK banks have even changed their rules and no longer offer mortgages directly to expats and non-residents, while other international lenders have made UK mortgages available.

However, not all lenders have followed this path, and even though there is a significant amount of economic, political and social uncertainty, in light of both Brexit and Covid, it is very much possible to secure a UK mortgage when living abroad.

When seeking a UK mortgage while living abroad there are a number of key factors which will affect your eligibility to apply for an expat mortgage.

In all cases, before deciding upon any given UK mortgage it is highly advisable to speak to an independent expat mortgage advisor who can understand your personal requirements before searching the whole expat mortgage market. Very often they will have access to products which consumers aren't aware of and therefore can present a wider range of options for you.

While this article seeks to provide an overview of the various eligibility criteria, remember that lending options are constantly changing and while the rates (as of 2021) are still low, your personal circumstances will have a significant affect on what rates you may be eligible for, if you meet the requirements for any given mortgage product.

If you are in any doubt or would like to speak to someone to discuss your options, request an introduction to one of our UK mortgage specialists who will be able to evaluate your circumstances and provide guidance as to your options. They will also be able to walk you through the application process and help you secure a UK mortgage.

Difficulties faced by expats applying for a UK mortgage

All mortgage lenders, whether for non-residents or residents, will determine an individual’s eligibility for a mortgage based on risk. One of the major factors of the banking crisis of 2008 was that lenders were open to lending to people who would be considered as risky (for example people overborrowing against their income meaning they were unable to pay their mortgages).

As lenders have tightening their restrictions, a more detailed investigation into individuals financial and employment affairs are conducted to ensure that the mortgages offered are both affordable for the individual and that the individual is less likely to have to default.

Unfortunately for non-residents, additional factors such as currency fluctuations, different economic certainties affecting employment and lack of international credit ratings means that the risk is naturally higher for a borrower living abroad. This means that for the average expat, it is more difficult to secure a UK mortgage and more time and information may be needed to ensure the process can be completed.

This should not in itself act as a deterrent, but merely be understood to be a part of the process for expats. Normally it means expats are going to pay a higher rate of interest and fees, but expats may also be more limited regarding the amount they can borrow and may need to speak to specialist expat lenders and brokers.

How much can expats borrow for a UK mortgage?

The amount anybody can borrow for a UK mortgage, whether they live in the UK or abroad, will primarily depend on two factors. The size of the deposit (discussed below as loan-to-value) and total provable income.

Most UK lenders will offer maximum mortgages between 3.5 and 6 times the total annual income of the applicant(s). However, the actual amount will also incorporate additional factors including employment history, other debts, number of applications, number of financial dependents and total committed financial outgoings.

If someone was applying for a buy-to-let mortgage, the expected income from the rent will also be taking into account when determining the maximum mortgage value.

UK mortgages loan-to-value

Loan-to-value (LTV) is quite simply the amount you need to borrow vs the value of the property. The loan-to-value is one of the core measurements that will determine which mortgage products are available to you.

For people looking to purchase a property to use as a primary residence, the LTV may be as high as 95% (i.e. you can borrow up to 95% of the property’s value) even for non-residents. These mortgages are normally expensive and will come with both fees attached as well as a higher than normal interest. Lenders will also do a far more detailed suitability check against you as the risk to them of the property entering negative equity (i.e. the borrowed amount being higher than the value of the property) is much greater.

Factors which may improve your chances of getting a UK mortgage as an expat

If you are an expat or non-UK resident, it is possible to successfully apply for a UK mortgage. Below is a brief list of factors which could increase your chances of successfully applying for an expat mortgage:

Proof of earnings

As with all mortgages, this is much simpler for people who are employed rather than those who are self-employed simply because it is easier to provide payslips dating back over a period of time to prove income.

Self-employed people will most likely be required to provide accounts dating back several years by an internationally recognised accountant.

While some banks will require income to be paid into a UK bank account, this is not a necessity, although it does provide a much easier way of proving income.

Credit history and ratings of expats

While it is not essential that you have a UK credit history to apply for an expat mortgage, having a strong UK credit history can help when seeking the best rates and mortgage deals.

Obviously the longer you have lived abroad, the less likely your UK credit rating is going to help you as there are no international credit rating agencies.

Keep some form of financial association in the UK and thus maintain a UK credit file

By maintaining some form of financial association in the UK, such as a credit card or a residential address (such as your parent’s home), you are likely to be able to apply for a wider range of mortgages. This is because your financial footprint can still be seen by UK lenders increasing the information they have about you.

However, it is important to understand how this might affect your tax affairs. Before making any decisions about your best course of action, we recommend that you speak to an independent advisor who understands the intricacies of mortgage applications and also tax affairs of expats.

Location of lenders

The natural approach of British expats is to go to the standard UK banks who offer expat mortgages. However, expats may also be able to secure funding from non-UK based lenders so it is a good idea to ensure you search thoroughly for a suitable lender, alternatively…

Use an expert expat mortgage broker

When living in the UK, applying for a mortgage can be a relatively straightforward affair. People will often simply go to a comparison website, or even just talk to the bank where they have their current/savings accounts.

To get a wider range of options, which is important for expats, a specialist mortgage broker, while adding additional fees to the process, may provide you with a far greater chance of not only securing a mortgage, but also securing a mortgage at a more reasonable rate.

Never assume that the only products that are available are shown on a lender’s website as brokers will have access to unique products and will therefore be able to provide you with opportunities you wouldn’t be able to find if you approach lenders directly.

Provide as much information as possible

Lenders will make their decisions based on the information you provide. In the absence of international credit checks, expats therefore will need to provide a more significant amount of paperwork, often even at the early stages of the process.

Even a broker, while able to discuss the general options available, will still need to have a detailed understanding of your circumstances to determine whether they can assist.

While this can be frustrating, providing all of the required information as early in the process as possible is the best way of ensuring that time is not wasted. It is not uncommon for applications to be rejected late in the underwriting process when it is discovered that the stricter lending criteria cannot be fully met by the applicant.

Deposits

Whether an expat or not, all UK lenders will require a deposit when purchasing any property in the UK.

Due to anti-money laundering regulations in the UK (and most countries) applicants will be required to go through various due diligence process and this will include providing evidence of whether the deposit has originated from.

While this may seem trivial, keeping a record or any lump sum payments will assist in your application process, whether the deposit has come from savings, equity from a property sale, inheritance or other investments.

Can expats get buy-to-let mortgages?

When people leave the UK, it is a fairly common option for them to keep their UK property and rent it out. Therefore buy-to-let mortgages are normally available to expats as they are something of a necessity for many people taking this route.

Unlike residential mortgages, the deposit required is normally significantly higher and the LTV can often be limited to just 60%.

This also applies to expats and non-residents looking to purchase a UK property to rent out and in almost all cases, a significant deposit will be required for any buy-to-let mortgage – as well as meeting all of the eligibility criteria highlighted above.

Speak to an independent expat mortgage broker

Due to the complexities discussed above, as well as the likelihood that a specialist broker is likely to have access to unique mortgage products not available to consumers, it is essential to seek advice when applying for a UK mortgage as an expat or non-resident.

We have a panel of trusted mortgage brokers who specialise in assisting non-residents apply for UK mortgages.

Requesting an introduction to one of our trusted UK mortgage brokers takes no more than 3 minutes and you will also be eligible for an initial free consultation which will provide a general overview of your options.

The more information you make available to our partner during this initial consultation, the more useful and definitive the responses from our partner will be.

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