An expat mortgage is a mortgage that is taken out by an individual who lives abroad and has the intention of returning home at some point in the future. Over the years we have received various enquires from UK expats all over the world for mortgages. Here in this article, we will explain the possibilities of getting an expat mortgage and try to answer the questions such as what is an expat mortgage, why can it be difficult to get mortgages for expats, and what are the primary documents required for ex-pat mortgages etc.
Expat Mortgages Explained
Approximately 5.5 million British people live abroad, according to some estimates .
Some of them consider purchasing the property back in the UK. That may be as an income-generating and capital growth investment, a holiday home or, as preparation for a potential permanent return home as owner-occupiers.
Unfortunately, securing an ex-pat mortgage on a UK property can be challenging when you’re based overseas – unless you have help.
If you are looking for any help in getting a mortgage from overseas, you can contact us and we can connect you with an expat mortgage broker.
Why can it be difficult to get mortgages for expats?
Mortgage lenders typically base their decisions on whether to advance, as well as the potential sums they will lend (called the loan-to-value ratio or LTV), largely around the concept of risk assessment.
Risk can be broken down here into three general categories:
- the current valuation of the property and its potential future value projections, measured against the requested sum;
- the accurate and complete identification of the borrower and their previous history of conducting their financial affairs in a responsible fashion;
- an assessment of the borrower’s ability to maintain repayments of the sum borrowed in accordance with an agreed schedule over time;
In principle, these factors are consistent whether lenders are considering applicants based in the UK or overseas.
However, satisfying the requirements of the second and third points above can be far more challenging for lenders where the applicant is living outside of the UK and seeking mortgages for expats.
The reasons for that are straightforward:
- legal jurisdiction. Borrowers outside the UK are not easily held accountable under British laws;
- currency. Existing currency conversions and uncertainty over forward exchange rates;
- establishing proof of identity, permanent place of domicile and notably income, can be far more troublesome when the mortgage applicant is overseas.
None of these things is necessarily an insurmountable obstacle in terms of securing expat mortgages for non-UK residents.
Is buying property in the UK from overseas possible?
The simple answer to this question is – yes.
Potential lenders will need to find ways to address some of the above-mentioned practical complications and may typically also require more supporting detail than would be the case with UK-based applicants.
The first step is to identify a potential lender or lenders with a track record of providing mortgages to overseas buyers. Some providers do not operate in this market and you will save yourself a considerable amount of time and effort by only approaching those that do.
What documentation will I need to apply for an expat mortgage?
Each individual lender will most likely have their own views as to the specific information they require from you. Most are likely to need:
- evidence of your income. This will need to be verifiable and from a recognised employer. If you are self-employed or a business owner, you will typically need equally traceable and verifiable accounts and possibly bank statementsA record of a borrower's financial transactions often requir...;
- a satisfactory credit history check. This may be difficult if you do not have a UK address but there may be some acceptable equivalents from certain countries. The mortgage provider or an independent consultant will typically offer specific advice on that;
- a UK bank account;
- irrefutable proof of your identity and permanent place of domicile. What exactly is acceptable in that respect may vary from one lender to another but in some cases, up to three separate proof of residencyThe borrower's residency status, such as whether they are a ... documents may be required.
Typically, your required mortgage term will not be able to pass your 70th birthday.
What mortgage types are available for expats?
You might be able to obtain a residential expat mortgage or buy-to-let expat mortgage for UK property.
How much deposit will I need?
Most lenders will regard ex-pat mortgages for non-UK residents as being higher risk.
That means that their maximum LTVThe maximum loan may be lower for ex-pat applicants than UK-based individuals. Some may not exceed 75% and many may not go past 65%-70%.
You will therefore typically need a deposit of somewhere around 25%-35% or possibly even slightly higher. Some factors involved in this calculation will also be influenced by things such as an assessment of the reliability or otherwise of your income.
Anything you can do to ameliorate risk will be welcomed by the lenders. Therefore, the more deposit you can put forward, the more likely you will be to secure your mortgage.
In some cases, you may be able to borrow against existing assets such as other property. They will usually need to be located within the legal jurisdictions of the UK.
Does it matter where my deposit comes from?
Yes, the source of your deposit matters. International money laundering laws mean that there will be audit requirements if you are transferring large sums into the UK for the purchase of a property.
You will usually need to conduct your money transfers through a traceable UK banking account which can be directly associated with you.
Providing the legal requirements are met, lenders might accept a wide range of suitable sources.
They will normally insist upon the source being an on-demand and irrevocable instrument, such as UK savings accounts, stocks, property sales etc.
Many overseas international mortgage lenders might decline to accept deposit sources which are not settled or guaranteed. An example there might include wills that have not yet completed probate.
Other potential sources might include gifts from close family members. A gifted deposit from a third party or friend might be acceptable but typically only with very few lenders.
Are there mortgages available for expats returning permanently to the UK?
Yes, please read Our Guide to Just Back in The UK Mortgages.
Next steps to getting an ex-pat mortgage
Mortgages for expats are available and with help, there may be no fundamental reasons to stop you from getting one.
However, the process isn’t necessarily straightforward and the unwary can find themselves wasting a lot of time in what subsequently prove to be fruitless applications.
Can I get a residential mortgage as an expat?
The answer is yes. You can purchase a residential property in the UK. However, the type of mortgage you can apply for depends on whether you are living abroad full-time or part-time. A residential mortgage for a UK ex-pat will always depend on how long you intend to live away from the UK. It is better to contact a specialist broker before starting your mortgage application as an expat.
Can a British Expat still purchase a property?
Yes, it is still possible for a British expat to purchase a property in the UK. There are many different types of mortgages available for expats who want to buy a home in the UK. If you are interested, you can contact an experienced broker to help you with the mortgage deal.
Is it possible for an ex-pat to get a buy-to-let mortgage?
Yes, this is possible. In fact, buying a buy-to-rent property is often easier than purchasing a house. This is because most landlords require tenants to pay rent every month, whereas banks don’t usually ask for rental payments when they lend money for a mortgage.
Can I get a mortgage for a second home?
Yes, you can get a mortgage for a secondary residence. But, you should make sure that you meet all the criteria required by the lender. For instance, you must show proof that you own another property in order to qualify for a mortgage.
How much does it cost to get a mortgage for an ex-pat?
It varies depending on the type of loan you choose and the amount of money you borrow. Some people prefer to use a mortgage broker to help them with their mortgage applications. Mortgage brokers charge a fee for their services but they will help you in getting onto a property ladder in UK.
Are there any specialist ex-pat mortgage lenders or providers?
Yes, there are some specialist ex-pat loan providers in the UK. These companies specialise in providing mortgages for ex-pats. They offer competitive mortgage rates and flexible repayment options.
What is the best way to get a mortgage for my ex-pat son/daughter?
If you are thinking about applying for a mortgage product for your child, then you need to consider a number of things. First, you need to ensure that your child has sufficient income to repay the mortgage. Second, you need to check if he/she meets the eligibility requirements for a mortgage. Third, you need to decide which type of mortgage would suit your needs. Finally, you need to work out how much you can afford to spend on a monthly payment.