Mortgage applications from British passport holders living or working abroad are on the increase. Emma Knapp, expert mortgage adviser, explains what expats need to know to get the mortgage they need.
If you are an expat looking for a mortgage on a UK property, I would not recommend searching the market yourself because there are just too many variables. Every lender has its own borrowing criteria and application process, for example.
- Some lenders will only deal with applicants who work for a multi-national organisation,
- Some lenders have minimum income requirements
- Some lenders will only accept applicants who are paid in a certain currency
- All lenders have their own list of unacceptable countries. If the country you live in is subject to international financial sanctions, you may find it impossible to borrow.
All these can make finding the right mortgage product difficult. That’s where an experienced broker can help!
Having said that, you can help the process by preparing your paperwork in advance. All lenders will want to see some or all the following in support of a mortgage application:
- A UK bank account with the latest 3-6 months’ statements
- A British passport
- Your overseas’ address (not a post box)
- Details of your employment (i.e. contract)
Home-buyer or buy to let mortgage?
Most of the enquiries we get from expats are for buy to let mortgages, (for both purchases and remortgages). Expats use buy to let as a way of retaining property in the UK. Unlike a home-owner mortgage, the rent ensures that the mortgage payments can be met, and the tenants ensure that the property is not left vacant.
If you’re about to move abroad, you must ask your mortgage lender for consent to let if you plan to rent out your home whilst you are away. This is often granted for 6-12 months but is not a long-term solution. If you don’t get this consent, or it’s run out, you could consider trying to remortgage your property onto a buy to let. Unfortunately, there are difficulties with this option. Most lenders like the borrower to provide evidence of a forwarding purchase or address, and most will not accept addresses overseas. So it’s a bit of a catch 22… If you are in this situation, do get in touch to talk through the options. I’m not promising we can help but we’ll certainly try.
As with any other buy to let mortgage, if you are borrowing personally, the rent must usually cover the mortgage payments by at least 145%. If you are borrowing via Ltd company, 125% is more common.
If you are moving abroad or already living overseas and don’t own a property in the UK, some lenders will consider first time buyer-landlords although you will have more options if you already own a UK property.
In a few circumstances it may be possible to get a home-owner mortgage, for example, if you work abroad whilst your family continues to live in the UK.
Home-owner mortgages for expats returning to the UK.
There’s no such thing as an ex-expat! Once you are back in the UK you will be viewed as a UK resident which means you should have more options, as long as you meet standard borrowing criteria of course.
However, if you are living abroad but planning a return to the UK, you won’t be able to get a mortgage until you have actually made the move back.
I hope this blog has been useful. Whether you are an expat or a UK resident, do feel free to contact me for advice. Remember, we only charge fees if we are successful in getting you an acceptable, formal mortgage offer, so you’ve nothing to lose by chatting through the options.
Emma Knapp has left Mortgages for Business for pastures new. For more information or for any questions relating to this blog, please contact the Residential Team on 0345 345 6788, where one of our consultant mortgage brokers will be happy to assist.