Applying for a UK mortgage to purchase a property as an expat can be complicated! There are many considerations, such as:
- Finding British mortgage providers offering expat mortgages.
- Passing more stringent eligibility checks.
- Having a UK bank account to make mortgage payments from.
Revolution Brokers has years of experience negotiating mortgages for British nationals living overseas or global expats looking to purchase a residence, holiday home, or investment property in the UK.
Today we’ll explain a little more about what to expect.
If you need any further advice finding competitive expat mortgages lending, please give our team a call on 0330 304 3040 or drop a message to [email protected].
UK Expat Mortgages: The Basics
In essence, an expat mortgage works like any other. However, the difference is that the lender will consider applicants that live overseas.
The reason it’s tricky to find an excellent expat mortgage is that many lenders see this as high risk, so they either don’t offer expat mortgages or only offer them with rigorous qualification criteria and heavy deposit requirements.
There are several ways to improve your chances of approval and secure a more attractive interest rate:
- Consult a specialist expat mortgage broker! We have whole-of-market access, so compare every product available and provide oversight of the best deals.
- Get your finances in order. Lenders like to see proof of earnings, and a lot depends on your income stream and where that income originates. For example, some require applicants to have a UK job role (potentially based on an overseas location), and others will only lend to expats with employment in specific countries.
- Review your credit history. Expat mortgages are already higher risk than a conventional residential home loan, so you’ll need a clean credit history or ensure it’s as up to date as possible.
- Apply for an acceptable loan term. Some lenders don’t have upper age limits, but many do – if you apply for a term that ends before you reach 70, you’ll have more options.
In most cases, an expat mortgage provider requires a UK bank account, so if you can get that set up in advance, you’ll strengthen your application.
Eligibility Factors for Expat Mortgages
The next step is to look at the policies in place and ensure you’re in a position to pass affordability and eligibility checks.
Criteria for expats are usually somewhat different, but these vary considerably between lenders.
If you’re concerned about not meeting one of these criteria, get in touch as a niche lender may offer greater flexibility.
Standard Expat Mortgage Criteria
- A traceable UK credit history (more on this shortly!).
- Proof of a steady, reliable income stream – with signed confirmation from an accountant with an internationally recognised qualification.
- Payslips, bank statements and tax records.
If you don’t have a credit history or have a low score because you’ve been living abroad for some time, there are a few tips that might improve your prospects.
Having a UK address, even if it’s just for correspondence, is beneficial. That could be an address of a friend or family member, for example.
Higher deposits lower the lender risk, so if you can collate a more substantial down payment, you might be able to forgo some of the other requirements.
Maintaining a UK credit history is relatively simple.
You can take out an international credit card from a British lender, for example, or hold a domestic bank account and use that to demonstrate good use of credit and prompt repayments.
Expat Mortgage Deposits
Standard UK residential mortgages usually require a minimum 5% deposit at the bottom of the scale.
However, as an expat, you’ll likely need at least a 25% deposit against the property’s value.
Depending on the type of property and location, that can vary, but you will rarely find approval with a lower initial contribution.
Anything with a high Loan to Value ratio (LTV) is already a higher-risk lending product, so saving up a larger deposit is one of the easiest ways to reduce your mortgage interest rates.
Acceptable Deposit Sources for Expat Mortgages
You’ll need to evidence where your deposit comes from (i.e. savings, family gift, inheritance income), which requires more involved checks to demonstrate that the funds are from a legitimate source.
- Savings held in the UK or overseas account – depending on where you live.
- Investment income from capital stocks or shares.
- Property sale proceeds.
- Equity in an alternative property – most accessible if the residence is in the UK, but possible in some cases against an overseas home.
- Inheritance income that has been through probate.
- Gifts – usually accepted, provided the money comes from a close relative.
If you need any further guidance about sourcing a deposit for an expat mortgage or complying with the other conditions we’ve explored, please get in touch with the Revolution team.
Affordability checks and income evidence are more complex, but it is possible to find an excellent expat mortgage deal with expert advice from the leading UK mortgage brokers.