IMB Blog

UK Expat Mortgages: Industry Overview

General or the gut feeling about standard mortgages is that it is hard to get a mortgage,

1. If you are a non-UK resident

2. If you receive your salary in foreign currency

3. If you lack adequate UK credit history

This is the scenario where it makes space for lenders to come up with expat mortgages. Lenders who understand the above circumstances and flexible with such matter offer applicants with expat mortgages.

Lenders historical perception on expat mortgages was based on several important factors.

1. Lenders find it difficult to identify the source of funds

2. Concerns on money laundering

3. Assessing proof of income issued overseas is difficult

4. Hard to take legal actions against non-UK borrowers if necessary

However, this trend has been changed drastically over the years! As a result of increased competition among lenders, they have tried to expand into niche markets. Expat mortgages has now become one of the best niche products in the mortgage industry for both lenders and mortgage brokers. So, if we get what has changed in a nutshell,

1. High street lenders like NatWest, HSBC, Santander offering much competitive expat rates than before.

2. Non-high street lenders like Paragon also started offering BTL expat rates

3. Mortgage brokers also have changed their historical perception on expat mortgages and looking to expand their services to this niche.

There are few other favorable factors as well for the borrowers in terms of the regulations set be European Commission’s Mortgage Credit Directive (MCD).

1. The borrowers can convert their mortgage into a different currency at any point

2. Borrowers can benefit from an interest rate cap by mitigating the risk of dramatic interest rate fluctuations.

Even-though these are favourable movements for the borrowers, lenders have to bear the currency risk up to a greater extent. This has resulted in lenders coming up with competitive interest rates.

Two fundamental factors lenders consider when assessing an expat mortgage.

1. What is the country you are resident in?

It is important to monitor how FCA (Financial Conduct Authority) and other international organizations like IMF (International Monetary Fund) rate the subject country of the expat in terms of money laundering, financial risk etc. Another scale to measure the suitability of the country would be Fitch credit rating. Expats from high risk countries in Africa, South America would find it hard to apply for an expat mortgage. Residents from Europe and high-income Middle East countries have good chance of applying for an expat mortgage.

2. Who is your employer?

Expats who are working for a multinational company have relatively a high chance of getting a UK mortgage compared with self-employed or employees at overseas SMEs. Lenders can easily verify the income of multinational employees from the UK offices. However, lenders are becoming flexible with these criteria. There are opportunities for self-employed expats as well with several lenders to apply for expat mortgages.

Selection of the lender

Selection of lender for a specific expat would be a challenge. For example, Paragon do not offer expat mortgages for UAE residents whereas Skipton offers customized deals specified for UAE expats. If we are targeting UAE customers possible lenders would be,

  • Niche Building societies such as Skipton, Family Building Society
  • International banks such as HSBC
  • High Street lenders such as Santander
  • Contractor/self-employed friendly lenders such as NatWest

Therefore, an experienced mortgage broker has the best chance of guiding you through a smooth application process and helps you achieve the best results in terms of your property investment plans in UK.

Securing a mortgage before returning to the UK

UK residents may move overseas either for work or a career break, but when moving back to the UK, may struggle to get a mortgage.

This is because most lenders will only lend to applicants that have had a UK address during the past three years. Some lenders may also need to see recent UK credit files and as expats have been abroad, this can be an issue.

That being said, there are lenders that will consider mortgages for expats returning to the UK, irrespective of whether or not an address in the UK can be provided.

Before moving abroad, UK residents can also take steps towards mortgage approval upon return, such as keeping a UK correspondence address. Keeping a correspondence address in the UK can make all the difference in being approved for mortgage. You can use the address of family members such as parents or someone you really trust. Remember, all your mail and correspondence will be going to that address so think carefully before making a decision.

By maintaining an address in the UK, you can boost your mortgage chances quite considerably. Not having a UK address for the past three years will result in limited mortgage options. Although there are lenders that will consider you without a recent UK address, taking precautionary steps before leaving is wise.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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