Cash-rich expats returning to Britain after a posting abroad are generally in for a shock if they want a mortgage.
In most cases, British banks and building societies will not consider a mortgage application unless the expat has been in the country for at least three years.
That’s a problem for overseas workers preparing for a posting home looking for a place on the property ladder.
The rule does not only apply to homes, but loans for property investments as well.
In many cases, expats who have a healthy cash deposit to buy a home cannot understand why they cannot raise a loan.
The reason is their credit rating.
No credit history
If someone has lived and worked outside Britain for a number of years, onshore credit agencies do not track their financial histories and lenders have no policy for calling for or interpreting an overseas credit record.
Without a credit history and formal address in the UK which the credit bureaux can see, the former expat is invisible to banks and building societies, so they take the easy option and decline the application because they cannot assess the risk of lending.
Most mortgage lenders have an automated credit scoring process when an application arrives, so no one looks at the papers and makes a personal judgment.
If the application passes the score, then the underwriting process can continue, but if not, the plea for a mortgage falls on deaf ears and is consigned to the bin.
Who to ask for a loan
Even worse, if expats make an application to several lenders and all are rejected after searching their credit histories, these checks leave a message on the file that can count against the expat for up to two years.
For expats in this situation, the way out is not easy, as every lender has a different policy for dealing with their applications.
Expats trying to track down that elusive mortgage have a few places to look.
- NatWest International will lend to expats
- National Counties considers buy-to-let investment for expats
- Santander, Barclays and Nationwide will take applications from expats who have recently returned to Britain.
Best advice to expats is to wait for at least six months on returning to Britain. In this time, open a bank account, take out a credit card and get on the electoral roll by renting a home or living with friends as soon as possible.
