How to get a UK expat mortgage

10-March-2022 17:00
in International
by Jennifer Stevenson
How to get a uk expat mortgage

You're a British citizen, currently living and working outside the UK and earning in a non-sterling currency, with a view to buying property in the UK. 

It's true that applying for a UK mortgage as an expat can be more complex, but the current strength of foreign currency against the pound also puts you in a good position to buy property back in the UK, either as an investment or as a place to return to in the future.

You may find yourself in the following scenarios:

  • You're a first-time buyer and want to buy a house in the UK
  • You perhaps already own property in Britain and want to expand your portfolio
  • You're looking to remortgage from residential to buy to let
  • Or perhaps you're returning home in the near future and want to remortgage your rented out home as your residence

The key to getting the most competitive mortgage deal is to work with a specialist expat mortgage broker who has a strong understanding of this niche market and direct access to the specialist lenders and private banks who will enable you to make the most of any opportunity.

This Guide at a glance:

What do you want to do?

Expert Tips For Expats

The 3 key factors that affect you as an expatriate borrower.

Do I qualify for one of the golden get-out clauses that could shave thousands off your mortgage costs

And while you're here, our comprehensive guide on UK Expat Mortgages covers everything you need to know about the process.

Expat mortgage specialist brokers, Clifton Private Finance

1. Buy UK Property For The First Time

Many of our British expat clients are first time buyers who have moved abroad with work and don't yet own UK property. 

Getting on the UK property ladder for the first time can be tough and you may be worried about affordability as well as the extra complications of living abroad with foreign income, or if you're self employed.

However, sterling exchange rates mean that expat first time buyers don't have to save as large a deposit because they’ll get more for their money. And, the mortgage repayments are also cheaper because the mortgage on the property is paid in sterling.

And there are specialist lenders who won't be put off by your non-sterling income, self employed status or lack of UK credit history. 

Speak to one of our dedicated expert mortgage advisors today who can talk you through what's possible, the best mortgage deals available for first time buyers, and give you all the support you need in the process of buying your first UK property while living abroad.

 90 per cent mortgage for UK expats, Clifton Private Finance

2. Buy An Investment Property

A generous expat salary package can be put to good use. If you don't intend to buy in the country where you're working then investing back in the UK makes sense:

  • It's a market you're familiar with
  • With efficient and transparent legal and financial services
  • Good property management agencies are available
  • And you'll have personal connections to check on your property for you

In the residential market, the chronic shortage of housing in the UK and the restrictions on new-build developments ensures strong demand for rental properties and excellent return potential on investment - particularly outside London. 

A buy to let mortgage will enable you to rent out your UK property while you're away, with the rental income you gain covering the cost of the mortgage.

Of course, a UK buy to let mortgage is more expensive than a residential mortgage (even if you are a permanent UK resident), but there are some excellent options for expat landlords looking to rent out for the first time, or if you're hoping to extend your rental portfolio.

Check out our full guide for everything you need to know about securing an expat buy to let mortgage here

Expat Buy To Let Mortgage At Domestic Rates, Clifton Private Finance

3. Remotgage My UK Home As An Expat

This is the most common scenario that we see and the point at which most overseas professionals first run into the financial issues of being an expat UK property owner.

When you left the UK you probably informed your mortgage lender. If you weren't intending to let out your home, most lenders won't have been concerned about where the mortgage was being paid from - as long as it was getting paid.

What they will be concerned about is that the property is still fully insured. So, you will need to have checked the terms of your insurance policy about:

  • how long the property can be empty for
  • how often it needs to be checked
  • how often you need to return to it

If you're unsure or need help with getting the right cover for your property - see our Property Insurance Services and how we can help. 

If your fixed-rate mortgage term has come to an end and your borrowing is going to revert to your bank’s standard variable rate (SVR), you won't want to be sitting on this rate for any length of time, so it's best to remortgage.

Unless you return regularly to stay in the property (more on this below), you’ll now be applying for a mortgage as a British expat. 

The option to release additional funds

Many of our clients take advantage of their higher expatriate salary to remortgage at a higher value, using the additional funds to consolidate debt and pay off their relocation costs.

Get in touch with one of our specialist expat mortgage advisors today, and see how we can help you remortgage at the most competitive rates.

Expat buy to let remortgage to release funds, Clifton Private Finance

4. Remortgage as a Buy To Let

If you decide to let out your home when you leave the UK, you should inform your mortgage lender.

They’re usually willing to grant a "consent to let" until your current mortgage deal comes to an end, subject to the property being fully covered by landlord insurance.

But when your fixed mortgage deal comes to an end, you’ll need to apply for a buy-to-let mortgage as an expat. And that’s a different ballpark - lending rates for expatriates are higher.

Lenders will be looking for an independent valuation to confirm that the projected rental income for the property will cover the increased cost of a buy-to-let mortgage at the expatriate rate.

Lenders will also want to stress-test affordability on salary:

  • For 65% LTV you’ll need to be earning £40K+ equivalent
  • For 75% LTV you’ll need to be earning £50K+ equivalent

We can find you a lender who has no income requirement at all – but their rates are higher.

"Top-slicing" to top up a shortfall on rental income:

A few lenders allow owners to make up any shortfall on rental income from their earned income, but it’s not usually a necessity. We can usually find more affordable borrowing for you by extending the length of your fixed-rate term. 

Contact us to access the best buy to let mortgage rates available for UK expats today

 Remortgage Advice for UK expats, Clifton Private Finance

5. Remortgage my rented-out home back to my main residence

If you’re planning to move back into the home you’ve been earning rental income from, you’ll want to get off your BTL expat mortgage and onto a domestic residential mortgage rate as soon as possible.

This is fairly straightforward if you’re being transferred by your current employers and you’ll be on a local salary again. If however, you're inbetween jobs, it will be a little more complicated, and you may need to delay remortgaging until your new employment is set up.

You might also want to check there are no early repayment charges (ERCs) on your current BTL mortgage.

You can arrange to remortgage while you’re still out of the UK if:

  • You know your return date
  • You will be paid in sterling
  • You can provide confirmation of your future salary 

Our team of expat mortgage advisors can answer all your questions and connect you with the best residential mortgage deals if you're making your move back to the UK soon.

UK Expat Mortgage Broker Service, Clifton Private Finance

The 3 Ways Being An Expat Can Affect Your UK Mortgage Application

1. Your UK bank might not give you a mortgage

This comes as a big surprise to many Britons who have lived and worked in the UK for years and have a long-established relationship with a bank or building society.  

But when high-street lenders look at your foreign currency income, many just say "no". And if they don’t do expat lending, you'll need to look elsewhere.

  • Often it’s only specialist lenders, who are more flexible, who will consider your situation and offer the most competitive rates.

  • It’s difficult for you, as a borrower now living overseas, to track down enough private banks and confirm their rates in order to make reliable cost comparisons.

  • And because many of them are small, and not set up with customer relations departments, they’re only accessible via an expat mortgage broker.

UK expat mortgage advice, Clifton Private Finance

2. You lose a chunk of your assessed income to allow for currency fluctuations

Borrowers who earn in a foreign currency are a major concern for lenders. The amount they’re able to remit back to the UK to cover their monthly payments can be hugely impacted by currency fluctuations, which is completely out of your control. 

To cover themselves, most expat lenders will slice a flat-rate of 25% off your income affordability assessment to allow for worst-case currency fluctuations.

3. You’ll be paying an expatriate rate

Whether you’re buying for the first time, remortgaging a property you already own, or you're looking for an expat buy to let mortgage, there are additional administrative costs in dealing with borrowers overseas. Different time zones, different types of ID, accounting systems and payroll verifications are all administrative burdens that the lender will pass on to you through higher rates.

As an expat, you have to expect the mortgage criteria and application process to be more tricky. The mortgage products on offer can also be more expensive than regular UK residential mortgages.

But with the expert advice and connections of our dedicated expat brokers, you can be confident in getting the best mortgage deal to suit your circumstances. You'll also save yourself valuable time and find the process much smoother than trying to approach expat lenders directly.

READ ALSO:UK Property Hotspots For Expats in 2022 

UK Expat Mortgage For USA resident, Clifton Private Finance

Are You Definitely Classed as an Expat?

We’re experts on arranging expatriate mortgages – but that doesn’t mean we’ll set you up with one if it’s possible to get cheaper, domestic mortgage terms.

If you approach a high-street lender or building society showing a foreign currency income, they'll tell you you’re an expatriate borrower.

But we’ve had significant successes getting non-expat mortgages for clients who live and work outside the UK and have non-sterling salaries.

To do this, we need to be able to show:

  • Substantial ties to the UK (such as close family based here)
  • Frequent trips back to Britain (evidenced by travel records or credit card spending)
  • Regular activity on a UK bank account
  • Preferably no property owned in the country in which you're living overseas
  • Good credit history

Expert Mortgage Advice and Guidance For UK Expats

There’s no doubt that mortgages in Britain can incur higher mortgage rates for expats than for local residents.

Which is why you need to have an experienced expat mortgage broker advising you. We can access the lenders who offer the best terms based on their lending criteria for your circumstances.

And expats often need to move quickly. You may have seen a property you want to buy while you're in the UK on a visit and want to get the deal done before you leave. You need an experienced expat mortgage adviser who can anticipate the likely issues that your mortgage finance will throw up.

A first phone call to one of our specialist expat mortgage brokers will establish how we can help you and how quickly we could get your finance in place.

You can book a telephone consultation that's convenient for you:

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+44 203 900 4322