Our Guide to Just Back in The UK Mortgages
Since the credit crisis of 2008 and the general tightening up of affordability criteria imposed on lenders by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRU) of the Bank of England, getting a mortgage is likely to prove difficult enough even for those who have been living permanently in the UK.
For returning expats, those difficulties are often compounded.
Our following guide explains why the difficulties arise, but also show how you may overcome them with the help of us here at Needing Advice.
Can I get a UK mortgage as a UK Expat?
Getting a mortgage as a repatriating Briton is likely to prove more difficult for a number of reasons:
- since you have been living abroad, you are unlikely to have up to date referees and your credit history may not reflect your current or recent earnings;
- in accordance with FCA and PRU requirements, most mainstream mortgage lenders conduct a credit score, but without a recent address or addresses in the UK, this is unlikely to produce the necessary score – and your application may be rejected.
- if you are coming home to take up further employment, your situation is helped by the fact that you may be able to provide a contract of employment (together with a reference) from your new employer and be able to furnish proof of your anticipated earnings;
- there are some lenders prepared to conduct a credit check, rather than searching for a credit score – a process that involves scrutiny of your financial background, irrespective of where you have been living, providing an assessment based on personal, case by case circumstances.
Provided any such credit check meets the lender’s criteria – and you have the necessary deposit and are able to show your income is sufficient for making the mortgage repayments – we are generally able to point you in the direction of a lender prepared to advance the mortgage you require.
Assuming all’s well with your credit check, you have a deposit and can prove you can meet repayments, you should be able to find a lender willing to extend you mortgage credit.
Money laundering and proof of funds
A further hurdle for those seeking a just back in the UK mortgage is the likely need to prove the source of the funds you are using and to avoid any hint of your attempting to launder money obtained abroad.
The legal processes involved in the conveyance of a property oblige solicitors to investigate the source of the funds to be used by the purchaser. As an expat or applicant for getting a mortgage for a repatriating Briton, therefore, you may be asked for additional proof of the source of any funds you are bringing into the country from abroad.
Solicitors handling your purchase of a home in the UK are bound by the Money Laundering Regulations 2017, which specifically refer to checks on the sources of funds:
- Regulation 8 – refers to the need to scrutinise transactions such as the purchase of property, with respect to the source of the funds used, to ensure that the transactions are consistent with what is known about the purchaser, his business and his risk profile; and
- Regulation 14 – requires solicitors to establish the source of wealth or funds used in any business relationship or transaction.
To comply with anti-money laundering legislation, says the Law Society, the source of funds is critical and client identification and verification may be secondary.
The use of cash may pose a particular problem and the onus is on you to prove that the funds are not from the proceeds of crime. If your solicitor suspects any such case, he is obliged by law to report the suspicion of money laundering.
Your defence against such suspicions is likely to lie in your ability to furnish wage slips, bank statements, and the details of your overseas contacts.
It is not only your solicitor, but the bank too that may require proof of the source of your funds before they can be cleared. You may need to address questions about particular transactions, especially if there are frequent payments or for large sums of money.
All of this may take time, of course, and the sooner you are able to address these issues the sooner you may be able to complete the purchase of your home in the UK – rather than miss out on the opportunity through any delays that are caused.
What documentation will be required when applying for a just back in the UK mortgage?
If you are an expatriate planning to return to the UK and buy a property here within the first year or so of coming home, there are a number of steps that might help with your obtaining a just back in the UK mortgage:
1. Keep a correspondence address in the UK
This can be your parents’ or another relatives’ home address – since this is where any post is going to be received, it needs to be someone you trust;
2. Retain a UK bank current account, in addition to a credit card
Ensure that your bank allows your accounts to remain open whilst you are living overseas.
3. Have a job lined up for when you return
If you have the same employer in the UK as you did abroad, this is likely to make things easier and quicker in getting a mortgage as a repatriating Briton.
If you are moving to a new firm you may have to wait to get a mortgage until you have been employed by them for at least three to six months. Depending on the mortgage company you are applying to, some may accept a letter of appointment with a start date and your salary details, as well as your contract and employment references.
If you are returning to self-employment in the UK, you are unlikely to be accepted for a mortgage without at least a year’s worth of audited accounts – indeed, some mortgage lenders may insist on the last three years of accounts.
How much deposit will I need?
Different lenders have different criteria and requirements. As with any mortgage application, however, the bigger your deposit the less you need to borrow and the greater the chance of your request being granted.
Ideally, you need to be aiming for a deposit equivalent to at least 25% of the purchase price of your home.
Next steps – Getting a mortgage as a repatriating Briton
A just back in the UK mortgage may prove more than usually difficult to obtain – and you may face the additional hurdles of proving the source of any funds you are using for the purchase of your home.
Here at Needing Advice, however, we may help you overcome any difficulties that lie in your way and make it possible for you to own your dream home soon after arriving back in the UK.