Our Guide To Mortgages for Seafarers
You are in full-time employment, you are fully trained and experienced in the job you do, and you work hard, Who would believe that getting a mortgage might prove quite so difficult?
Yet mortgages for seafarers – or yacht crew, or many other offshore employees for that matter – are likely to encounter difficulties when applying for a mortgage.
Here at Needing Advice, we not only sympathise, but recognise some of the difficulties you are likely to encounter. Unlike many other mortgage advisers, for example, we understand your unique tax circumstances – the fact that you are liable for UK tax on your earnings but may qualify for Seafarers Earnings Deduction and have a steady income which lends support to any mortgage application you want to make.
In short, our aim is to take the hassle, time and effort out of applying for something that ought to be as straightforward as a mortgage and guide you towards a suitable product at a competitive rate.
Why are mortgages for seafarers often difficult to get?
The majority of mortgage lenders are accustomed to dealing with applications from individuals who have land-based jobs – on an employed or self-employed basis.
Their income derives entirely from the work they do in the UK and on which they pay the appropriate rate of income tax.
Lenders might be forgiven, therefore, for trying to pigeon hole seafarers or other offshore employees into a self-employed mortgage application. That attempt is then likely to be thwarted by unnecessary obstacles and questions when they see that your income is tax exempt because you qualify for seafarers’ earnings deductions.
If you are a UK resident, you are liable to pay UK income tax. But if you have worked outside the UK for longer than a usual minimum of 365 days you may qualify for seafarers’ earnings deductions from your tax liability. Despite having payslips and bank account statements, therefore, you may find it more than usually difficult furnishing the evidence of income needed to support a mortgage application.
If you work as yacht crew, your difficulties may be compounded still further by your unique financial situation – likely to provide high earnings at times, but subject to wide fluctuations in currency exchange rates. All in all, financial circumstances which are likely to make obtaining a mortgage more difficult.
Mortgages for offshore employees may prove still more difficult to obtain by those who are not UK residents, earn their income in foreign currency, pay no UK income tax, and have no credit history in the UK.
If you fall into any of these categories and are in search of seafarer mortgages, mortgages for yacht crew, or mortgages for offshore employees here at Needing Advice we are likely to be able to help – not only in finding the mortgage you need, but in guiding you towards some of the most suitable deals available.
How much deposit will I need for a seafarer mortgage?
Once you have persuaded a potential mortgage lender that you represent no greater risk than many another applicant, a seafarer mortgage typically requires a deposit of at least 15% of the purchase price of the home you want to buy – although there are some providers prepared to accept deposits as low as just 5%.
As with any mortgage application, however, the larger the deposit you offer to put down, the less you need to borrow – and the greater the chances of your application succeeding.
What proof of income will the lender need to see?
Any lender mortgage lender is going to require some proof of your declared income – to comply with the Mortgage Market Review (MMR) rules enforced by the industry’s regulator, the Financial Conduct Authority (FCA).
Exactly what details are required may vary from one lender to another –
seafarers are looked at on a case by case basis as there are a lot of factors underwriters need to take into account when assessing the case – but typical examples are likely to include:
- a reference from your accountant;
- SA302s – these are the confirmation certificates of tax you have paid and issued online by HM Revenue and Customs (HMRC) if you complete a self-assessment (if you are using an accountant, ask him or her to obtain the necessary SA302s on your behalf);
- accounts, payslips and tax overviews (also available from HMRC) – preferably for the past three years; and
- if you are UK-resident, paid in sterling through a UK bank account, but your income is not taxed because of the time you spent working outside of the country, you may need evidence of this exemption or allowance from HMRC.
It is worth bearing in mind that some mortgage lenders might automatically deduct the tax they expect you to have paid when calculating your income for mortgage affordability purposes.
If that calculation results in your application being declined, you may appeal to an underwriter for reconsideration of your case based on your gross earnings.
What else may I need to be eligible to apply for a seafarer’s mortgage?
Some lenders may require that you have a permanent right to reside in the UK and you must live in the UK when not at sea.
Others may require you to provide evidence that your immediate family is going to be living full-time, as their principal place of residence, in the property you intend to buy.
As part of my proof of income, do I have to be paid in Sterling?
Your income does not need to be paid only in Sterling, since most currencies may be considered by our panel of lenders.
The only exception is if you are earning your income, or using funds to purchase property from jurisdictions subject to government embargo or those countries currently denied membership of the Financial Action Task Force (FAFT).
If you are a seafarer, yacht crew or other offshore employee, obtaining a mortgage is likely to prove more than usually difficult.
In many instances, you may be considered a greater mortgage risk to lenders – not least because your tax returns may be complicated by your qualification for seafarers’ earnings deductions, the fluctuating nature of your income or the fact that you have no liability for the payment of UK income tax.
Here at Needing Advice we may help you overcome any such difficulties by identifying likely lenders offering some of the most competitive mortgage rates.