How To Get A UK Mortgage When Living And Working Abroad

20-December-2023 9:53
in International
by Jennifer Stevenson
How to Get a UK Mortgage When Living Abroad

It's certainly possible to get a UK mortgage while living abroad, but applying for a UK mortgage as an expat can be difficult because being based overseas makes it that bit harder for lenders to establish your earnings and check your credit history.

You may find that you need to give your credit score in the UK attention, or provide additional documentation to establish your earnings and address. Also, the most competitive interest rates on the market may not be available to expats compared to UK residents.

We have experience facilitating property finance for UK expats across the globe, and we have contacts with lenders who offer the most favourable terms to overseas applicants - which gets the hard part done for you.

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  For more info, check out our complete guide on UK mortgages for expats.

Reasons for Buying a UK Property While Based Overseas

  • Investing in a good-value property can be beneficial when markets are strong, providing opportunities for capital growth and rental income. 
  • There are times when international markets can be uncertain - and you may want to buy in an area with strong property rights protection and a record of stability. 

Regarding both of the above examples, our advice to US investors may be helpful. 

  • Central London and rural Home Counties offer unique historic properties in iconic locations, making them valuable investments and ideal homes.
  • The UK offers a wealth of good-value properties with excellent rental returns. 
  • Many expats plan on returning to the UK after some time and want a home to return to when they do. Until then, they can earn a decent rental income while they live overseas.

See similar: The 9 Best Places to Live in the UK if You're an Expat

What do the experts say?

This year there have been significantly more hoops to jump through regarding employment verification, in turn making the due diligence process lengthier.  

But despite the additional paperwork, there are products on the market catering to expats. 

We’re also seeing lenders reduce their rates gradually. The expat market is fairly static, but we have seen a slight decrease in rates for expat mortgages, and more lenders are offering expat mortgages for limited companies to keep up with the demand. 

Carly Cheeseman
Head of International, Clifton Private Finance

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Why you may need to remortgage a property you already own

If you already own a property in the UK and are relocating overseas, it's important to inform your mortgage holder that you will no longer be living at the property.

This is so you can secure Consent To Let, which gives you the correct permission to rent out your property while you live overseas.

Informing your mortgage broker also ensures that the vacancy doesn't invalidate your insurance or mortgage terms. 

  • If your mortgage comes to the end of the fixed term for your agreed interest rate, it will revert to your lender's considerably higher Standard Variable Rate. To avoid paying this extra cost, you'll need to remortgage your property, either with the same lender or a different bank or building society.
  • You'll need to consider your new circumstances when applying for a new mortgage as an expatriate property owner, whether you intend to rent out your property or not. If you intend to rent out after moving overseas, you'll need to apply for an expat buy-to-let mortgage. You'll also need to verify your income and traceability with the lender. 

Why are Expat Mortgages More Difficult to Get?

  • Credit rating

Most highstreet lenders require a good credit score to offer a mortgage. However, if you've spent years living in another country, it's probably going to be quite hard to track your history, and your UK Credit may be non-existent. 

  • Income and proof of address

High street lenders may classify you as a 'contractor' or freelance worker because of your expat status. Because of this, many traditional lenders will assume you do not have a regular income, ruling you out of their eligibility criteria. 

Those open to lending to an expat will require proof of income and address. Your payslips can verify your income, but it can be harder to prove your address because many high street lenders want to see a utility bill.

But there are ways around providing a utility bill for expats - like getting a letter from your employer, for example. 

It's also important to note that most high street lenders will only consider your basic income. Other consistent payments, like shareholder dividends, may be discounted.  This could limit the amount you're allowed to borrow significantly, even if you can afford more.

  • Time

Even if you do manage to jump through these hoops, high street lenders can take too long to agree on the finance you need. 

Other institutions have made it even more complicated. Since the EU’s Mortgage Credit Directive (MCD) in 2016, lenders have become sceptical about providing a UK mortgage to people living and working abroad.

So if you need finance quickly, high street lenders could let you down. 

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Issues with Buying to Let as an Expat

The obstacles can further increase if you buy to let as an expat. The 2017 Prudential Regulatory Authority (PRA) made it harder to get a mortgage for rental purposes to free up properties for residential use.

Like with any mortgage, you'll need to show you can afford to cover the monthly costs. When buying to rent, your rental income must cover 145% of the mortgage to cover any void periods. And if the property is considered HMO, it jumps to 170%.

You'll need to complete a surveyor valuation to provide evidence that your rental income will cover the monthly payments, and the paperwork can be complex to fill out.

Factoring in the distance between yourself and the lender complicates matters further. You'll need to do this individually with all the properties in your portfolio to prove that their performance matches the criteria. 

How Can I Get a Mortgage as a UK Expat

To get a mortgage as a UK expat, it's essential to get access to the full range of options available. Many take the specialist broker route. Specialist brokers understand the expat world and have cultivated relationships with private and specialist banks to secure bespoke finance options.

Many high street lenders are likely not to consider their client's full income when applying for a UK expat mortgage. And this might mean you won't meet the criteria to borrow the full amount you need to purchase the property you have your eye on.

A specialist broker, however, will be well-connected with lenders open to complex circumstances - some of whom will be more likely to account for different sources of income, such as bonuses and dividends. 

This flexibility and specialist insight can be especially useful if you're looking to secure a high value mortgage.

This may allow you to get a deal based on your needs instead of meeting high street lender criteria, which in some cases can be nearly impossible to fulfil. 

Watch our case study detailing how we helped clients earning Cayman Island dollars secure a mortgage for a UK property:

How We Can Help You Secure a UK Expat Mortgage

We can help you secure a UK Expat mortgage that suits your needs. It will be more convoluted than for UK residents, but it will also be easier than going with a high street lender. 

A lot of documentation needs to be produced, and providing lenders with exactly the information they want streamlines the process. 

You may have already started looking for UK property finance for yourself, but the first offers you see aren’t necessarily the best ones for you.

Considering the cost of finance over the period of a mortgage term, it makes more sense to get expert advice based on the full range of market options available.

At Clifton Private Finance, we have experienced expatriate mortgage brokers with contacts of specialist lenders across the whole expat lending market. Give us a call, and we can suggest some options and a rough idea of what rates you're looking at.

We'll usually get back to you with indicative terms within a couple of days, and our advice is free before you decide to go ahead with us:

With expert market knowledge, we can deliver terms tailored to your needs.  
Call us on +44 203 900 4322 to discuss your requirements.

Or you can book a free consultation with one of our expert advisors below.

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Learn more about our UK expat mortgage service