Arranging a mortgage against somewhere to live in Britain is proving a huge problem for expats who want to keep a toehold on home.
Finding a lender willing to take a mortgage application from an expat is the first issue as more and more international banks and building societies shut up shop.
The latest to go is Lloyds Banking Group. The firm pulled out of the expat mortgage market a few months ago, and has now given up flying the flag overseas for personal banking by selling most offshore interests to a private bank in Switzerland.
The market has a gaping hole, with the NatWest left as the only major lender.
This is good and bad for expats – yes, they have somewhere to go for a mortgage, but unfortunately, with a near monopoly, NatWest can afford to cherry pick customers. This leaves many disappointed.
The market does have other lenders – with Kent Reliance joining ranks as the newest.
Self-employed expats
Many expats find dealing with an expat mortgage lender when they are each based on opposite sides of the globe is no easy matter.
The first stage of underwriting is typically based on a credit score by a machine, and if you have no credit rating or cannot provide some sort of independent evidence, then you are marked as a fail.
Get through that stage and the hard work really starts.
Proof of income is the major hurdle. If you are a contract worker, then your lender will want to speak to your employer to confirm income. Factor in time differences, holidays and intercontinental phone systems – and that can take a while.
If you are self-employed, all of a sudden, the process becomes a lot more expensive as the lender will demand a recognised international accounting firm prepares accounts and tax returns. Not a lot of change left there out of a couple of thousand pounds or so.
Non-residence
Finding a reliable British-based mortgage broker who understands the expat market can help a lot.
They can liaise between you and the lender and try to make the application run a little smoother.
Don’t forget to bear couple of other points in mind when applying for a mortgage as well.
Tax status is important. One of the key factors in establishing non-residence is not having a home in the UK unless you are a temporary expat intending to work overseas for a limited time.
Next, realistic expectations about what you can afford to buy are essential. You will need clean credit, a large deposit – at least 25% of the property value – and cash for other purchase costs like lawyers and stamp duty.
