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Today, many people live and work overseas as international expatriates (expats). According to the Foreign and Commonwealth Office (FCO), over 5 million Britons currently reside abroad.
Securing a UK mortgage while living and working overseas can be a smart financial move, whether you’re looking to invest in UK property, generate rental income, or plan a future return to the UK.
Although it can be challenging to obtain a mortgage under such circumstances, it’s certainly achievable with the right preparation and guidance.
Here’s everything you need to know about how to get a UK mortgage while living and working abroad.
Can You Get a Mortgage While Living and Working Abroad?
Yes! If you’re a UK national living and working overseas and need a mortgage to purchase a property in the UK, you can apply for an expat mortgage. Expats are individuals who live and work outside their home country.
An expat mortgage can be used for various purposes, including buying your first home, purchasing an investment property, or acquiring a holiday home for consistent visits to the UK.
Considerations for Getting a Mortgage While Living and Working Abroad
While expat mortgages work similarly to standard mortgages, they come with additional requirements and conditions due to the perceived risks lenders associate with overseas income and absence from the UK. Here are some key factors to consider:
1. Deposit Requirements
Expat mortgages typically require a larger deposit. Lenders have stricter loan-to-value (LTV) caps, meaning you’ll need a deposit of 25% to 40% of the property’s value, compared to 5% to 10% for domestic borrowers. This higher deposit reduces the lender’s risk.
In addition, lenders will scrutinise the source of your deposit due to anti-money laundering (AML) regulations.
Acceptable sources include savings, property sales, investments, or inheritance, and you’ll likely need to provide proof of where your deposit originates.
2. Current Country of Residence
Your country of residence can impact your mortgage application. Lenders prefer applicants residing in countries with robust financial regulations.
If you’re living in a country considered a higher risk due to factors like political instability, war, or economic sanctions, you may face additional scrutiny or find fewer lenders willing to offer you a mortgage.
3. Currency
Certain currencies pose greater risks due to potential fluctuations that may affect your ability to meet mortgage payments.
Lenders favour more stable and widely accepted currencies and may be more cautious if you earn in a currency with high volatility.
4. Credit History
Your UK credit history is a crucial factor in the approval process. Many expats have limited or outdated credit histories in the UK, which can pose challenges.
Some lenders may not consider your overseas credit history and may require at least six months of UK credit history.
To improve your chances, consider maintaining UK financial ties, such as a UK bank account, phone contract, or postal address.
5. Employment and Income
Lenders will typically require proof of full-time employment and a stable income, which may need to be paid into a UK bank account.
Verifying overseas income can be complex, particularly if it’s earned in a foreign currency or from a country with different financial regulations.
Lenders may ask for documentation such as employment contracts, payslips, and tax returns.
For self-employed ex-pats, the process is even more stringent, and you’ll likely need an internationally recognised accountant to verify your income and accounts.
How Much Can You Borrow with a Mortgage While Living and Working Abroad?
The amount you can borrow depends on several factors, including your income, the strength of your application, and your overall financial profile. Lenders typically use income multiples to determine the maximum loan amount.
For expats, the income multiple is generally 4 to 4.5 times your annual income, although this may vary depending on the lender and your specific circumstances. Some lenders may set lower multiples to offset the additional risks involved.
Consulting a broker who specialises in expat mortgages can give you a clearer idea of how much you can borrow based on your unique situation.
How Can a Broker Help You Secure an Expat Mortgage?
Using a mortgage broker who specialises in expat mortgages can significantly improve your chances of securing a favourable mortgage. Here’s how they can help:
Expertise: Expat mortgage brokers understand the unique challenges expats face, such as verifying overseas income, dealing with currency fluctuations, and navigating differing tax regulations.
Access to Specialist Lenders: Brokers have access to a wider range of mortgage products, including lenders who may not be available on the open market.
While mainstream lenders may hesitate to offer mortgages to expats, specialist brokers have relationships with niche lenders who cater specifically to expatriates.
Simplified Application Process: A broker can streamline the application process, helping you gather the necessary documents and submit them correctly. They also guide you through each step, making the process less stressful.
Personalised Service: Expat mortgage brokers provide tailored advice based on your unique circumstances and goals. They work to find the best mortgage solution that fits your needs.
Final Thoughts
Securing a UK mortgage while living and working abroad might seem challenging, but it’s entirely possible with the right approach.
One of the best ways to improve your chances of approval and obtain favourable terms is by consulting a mortgage broker experienced in arranging expat mortgages.
They’ll simplify the process, offer personalised advice, and connect you with specialist lenders who can meet your needs.
Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.
Sources and References:
- [Foreign and Commonwealth Office Teabags or Travel Insurance](https://www.gov.uk/government/news/teabagsortravelinsurance)
