How To Get A Mortgage On A UK Property If You Live In Australia

Buying property in the UK when you’re living in Australia offers both a comfortable investment and a way to maintain ties to the UK should you plan to move here in the future. Whether you’re a UK expat living in Sydney looking at keeping a second home in Sussex or an Perth native with British parents interested in a plot in Plymouth, Clifton Private Finance is here to help you obtain the highest loan-to-value and lowest rates on the expat market today.

Check Your Eligibility

Who Can Apply for a UK Mortgage

For the most part, UK lenders will want you to have a strong link to the UK. This typically means current citizenship, a history of having lived in the UK, or income from a UK employer, but they’ll consider applications from anyone with a clear reason for purchasing a property in the country. This means:

• UK nationals living in Australia - Expat mortgages from Australia are increasingly common, maintaining a tie to home while investing long-term in the UK property market.
• Australians with UK heritage - Family in the UK is a well-considered connection that can help assure a successful mortgage application.
• Applicants working for UK companies or with UK investments - A solid history of working overseas for a UK employer, or owning shares in UK businesses will provide the necessary links.
• Joint applications with a UK partner - A joint mortgage with a partner living in the UK indicates a strong connection, perfect for a UK-based mortgage.

At Clifton Private Finance, we will help you build your application to show the close ties you have to the UK, increasing your application validity and boosting the number of products on offer. With access to the wide marketplace of UK specialist lenders, we will work closely with you to get the mortgage you need.

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The Challenges of Applying for a Mortgage from Australia

The lender evaluation is based mainly on your risk profile, developed from the data available regarding your income and creditworthiness. When looking to obtain a UK mortgage while in Australia, the following are the most common complications that we help you overcome:

• Foreign income - When considering underwriting, lenders convert AUD income to GBP using their own internal rate and apply a margin to account for exchange rate volatility. This leads to larger exchange-rate based stress tests, which may affect overall affordability.
• UK credit history - Even expats who grew up in the UK may struggle with a dormant UK credit record. Each country’s credit report agencies are independent, with no cross-border data sharing. This means that often, Australian applicants have no established UK credit history and are treated as higher risk due to the lack of available information.
• Deposit requirements - Because of the greater level of risk, a greater personal investment in the property is expected. Typically, expat and foreign national deposits are set to 25% or higher. In addition to the deposit size, provenance is an important consideration; anti-fraud regulations mean lenders must be able to determine the source of your deposit, with relevant declarations needed if it has been gifted or similar.
• Proof of income - Lenders will need to examine your payslips, tax returns, and banking information to determine your finances. In some circumstances, these may need additional solicitor or accountant certification.
• Documentation delays - In the final stages of mortgage application, where time may be tight, and the time zone differences can cause extra complications. In some cases, where working times are poorly considered, delays may stretch to days while waiting for important communication and documents to be signed.

Clifton Private Finance is perfectly positioned to jump these hurdles. Our experience in the UK mortgage marketplace means we can pre-empt many of the difficulties you may face, ensuring that all the paperwork is in order before any formal application.

Types of UK Mortgages Available to Australians and Expats

The majority of Australian/UK mortgages fall into two categories: those for residential use, with a view to returning to the UK, and those for investment purposes.

Expat and Foreign Residential Mortgages

Residential mortgages are designed for the homeowner to be living in the UK. A standard UK residential mortgage will not be possible for this clear reason; however, expat residential mortgages can help you set up a move to the UK while you are in Australia.

These specialist mortgages designed to help you return to the UK give you the time needed to put a new property fully in place to ensure a smooth international move when the time comes. They will have a specific requirement that you show plans to return to the UK, typically within six to 24 months, and may offer the opportunity to obtain a mortgage with a slightly more advantageous loan-to-value than other options.

Residential mortgages of this type will usually be structured as full repayment mortgages (capital and interest), which require a greater monthly repayment than interest-only alternatives. Affordability tests will be based on income, and lenders will want to see a clear path of employment both while in Australia and after the move to the UK. They are suitable for employees of international corporations supporting your international move, business owners with the flexibility to continue their work in either countries, or HNWI with multiple stable income streams.

Expat and Foreign Buy-To-Let Mortgages

Investing in the UK property market is the most common use of a mortgage for expats and Australians with a connection to the UK. A fast-moving and historically solid investment market with strong rental yield, UK property lets continue to invite consideration for many.

For those with a link to the UK through family, the advantages of a buy-to-let (BTL) mortgage are even greater. Expats now living in Australia may want to develop a UK property portfolio to help younger generations with accommodation through university, or through short-term holiday lets, provide themselves a dedicated occasional home for annual visits.

When obtained through an experienced broker, expat buy-to-let mortgages can be very flexible, providing for your specific needs with tailored terms and low-cost rates, allowing you to maximise profits even once management fees are accounted for.

BTL mortgages are usually interest-only, keeping the monthly repayment low to provide the best monthly income. With a long-term exit strategy borne from eventual sale or refinancing, the investment potential is also robust.

Portfolio Mortgages for Expats and Australian Nationals

Investors with a larger scope of UK-based properties and commercial interests gain significant advantages with combined equity and simplified administration with portfolio mortgage. A product limited to specialist lenders, expat portfolio mortgages give international investors living in Australia the power to develop a larger property portfolio, using existing real estate to provide security and leverage for further investment.

Discuss your portfolio needs with a specialist Clifton Private Finance advisor to explore your options and further develop your existing UK-based property interest.

Multi-Currency (Foreign Currency) Mortgages

In some circumstances, lenders may offer access to a multi-currency mortgage, drawing directly on AUD-based accounting to limit exchange-rate exposure and save on foreign exchange (FX) considerations. For HNWI and commercial portfolios with comprehensive UK investment, a multi-currency mortgage can smooth banking administration and save thousands through dedicated management.

Australian and Expat UK Mortgage LTV and Rates

Maximum Mortgage Ceiling

Calculating your mortgage ceiling and monthly repayments is important when considering a UK mortgage from Australia. The standard UK baseline of 4.5x salary to estimate maximum buying power applies only to FCA regulated UK-resident mortgages, and does not form a guideline for international mortgage applicants. Instead, each lender will consider the application on its individual merits and determine a maximum mortgage for an Agreement in Principle (AIP) based on initial underwriting. This has to account for additional factors, such as exchange rate fluctuations between AUD and GBP, and will likely be at a more conservative level.

Expect mortgage ceilings approximating 3.5x to 4x your foreign currency salary.

Loan-to-Value (LTV) and Deposits

LTV, which determines the deposit you require, is similarly lower for expats and Australians than the headline figures that are provided for UK nationals. However, partnering with Clifton Private Finance will give you access to the wide range of specialist lenders dedicated to providing competitive expat mortgages, potentially improving your LTV possibilities through dedicated mortgage products.

LTVs of 75% are a standard baseline, both for residential and BTL Australia-to-UK mortgages. In some circumstances, we can connect you to lenders who may offer as much as 85% on residential repayment mortgages should you be looking to return to the UK in the near future.

Australians and UK expats should, therefore, plan for 25% deposits in most cases.

Affordability Checks and Stress Tests

Affordability forms the core of lender underwriting, assessing your finances to determine if you can make monthly repayments.

For expats looking to return to the UK with a residential mortgage, affordability is primarily focused on your income. Additional headroom is applied to account for:

• Your risk profile - Your creditworthiness and document validity may affect income and expenses calculations.
• Interest rate changes - Typically, stress tests are assessed as if interest rates are 2% higher than the offered mortgage rate.
• Currency exchange rates - Stress tests must evaluate for a range of potential FX fluctuations.

When investing in rental property, lenders base the significant part of affordability test on other factors:

• Rental income - The expected annual turnover of the property as a let.
• Interest Coverage Ratio (ICR) - The ICR is a stress test margin to evaluate headroom of rental properties. For Australian nationals and UK expats, the higher rate of ICR of 145% is usually applied, though some lenders may be willing to evaluate based on the lower ICR of 125%.
• Management costs - Letting property in the UK from Australia must be done through an efficient management structure. The costs of full management must be considered by the lender when assessing affordability.
• Topslicing impact - Topslicing is the process whereby weaker rental yields are offset through your personal income. Specialist lenders who are happy to consider topslicing will evaluate your personal affordability in addition to rental income.

Mortgage Rates

Rates are calculated based on the underwriting during your mortgage application. Your risk profile will have a considerable impact on the final rate, which may be further affected by FX considerations and market conditions.

At Clifton Private Finance, we approach and compare multiple lenders to secure the best rates and terms for you. Nonetheless, expat and foreign investment mortgages will tend to have a slightly higher rate than similar UK national applications. Your expectations should be realistically set to assume an interest rate 1% to 3% higher than average headline rates.

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Applying for an Expat Mortgage from Australia

With Clifton Private Finance by your side, applying for a UK mortgage from an Australian base could not be simpler. Our advisors will work on your behalf during the UK working day, ensuring your mortgage application is being processed literally while you sleep.

With a pro-active and comprehensive application evaluation, we’ll smooth the process so that your application is as seamless as possible.

1. Initial checks - We will undergo a first stage basic check to pre-empt the lender requirements, checking your paperwork for ID, creditworthiness, ties to the UK, and all other basic information.
2. Income assessment - Ensuring you have qualified proof of earnings is an important step for all residential mortgages, and most BTL applications. These will be listed in AUD, with an effective current GPB equivalent as a guide for reference.
3. Lender comparison and approach - Our team will match you to a select group of lenders that align with your needs and circumstances. Once an appropriate lender is chosen, an AIP can be quickly obtained.
4. Full application submission - With an offer made on a property, we move to a complete application. This will all be handled by your CPF advisor, leaving you to do little more than remote signing through electronic submission.
5. Valuation and official offer of mortgage - The lender will complete their underwriting and make their mortgage offer. Our team are here to discuss the details of the offer with you to ensure it meets your requirements.
6. Completion - This can be done though solicitors while you remain in Australia, removing the need for a personal visit.

Tax Considerations for Rental Properties

Ensuring you understand how tax applies in both the UK and Australia is essential. As a landlord of a UK property, you must pay income tax (or corporation tax if through a UK-based Special Purpose Vehicle (SPV)) on your rental income. This should also be properly reported to the Australian Taxation Office (ATO).

The UK-Australia Double Tax Agreement (DTA) will apply to ensure you are not taxed twice on the same income.

Getting a UK Mortgage from Australia with Clifton Private Finance

At Clifton Private Finance, our international mortgage team are here to help you get the UK mortgage you need - even from the other side of the world. With decades of experience in expat mortgages, and specialist partners in FX, we are perfectly placed to handle all considerations for mortgage application. As a whole-of-market broker, we have access to the full range of banks and lending institutions in the UK who offer Australians and UK expats the opportunity to invest in UK property.

Book a consultation today to speak to a dedicated advisor and open the doors to international property ownership.

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