How to Get the Best Expat Mortgage Rates

Lisa Smith, BA (Hons), CeFA

As expats and overseas buyers continue to pile into UK property, predominantly due to low interest rates, the strong UK property market outlook and the fact that expats tend to have a higher disposable income than UK residents, demand for expat mortgages is soaring as investing in property in Britain becomes ever more appealing.

According to a recent study carried out by deVere Mortgages, more than 70 per cent of enquiries so far this year are from foreign nationals or British nationals living and working abroad.

How easy is it to secure a mortgage if you work overseas?

Securing international mortgages for UK-based properties can be somewhat frustrating.  Increasingly stringent rules coupled with the fact that British expats and foreign nationals are often deemed ‘high risk’ by many UK lenders, means specialist mortgage advice from an organisation with strong alliances with lenders is required.

Even expats who hold substantial assets and have a high, stable salary are still usually red-flagged by lenders due to a lower UK credit rating as they have lived outside the UK, earned a different currency and worked for a non UK-based firm.

As such, it can prove difficult for lenders to satisfy themselves of expats’ suitability to repay mortgages, meaning that certain lenders will sidestep this market completely.

Many UK -based mortgage lenders undertake credit and identity checks on prospective buyers, but with many of these checks being automated, many expats can fail if they aren’t on the electoral roll, don’t possess a UK address or don’t have a UK credit card.

According to deVere Mortgages Managing Director, Mike Coady: “We have found that British expatriates and overseas property investors are extremely eager, more so than ever, to buy property in the United Kingdom.

“A substantial majority of these buyers will, typically, return to Britain at some point, and would like a property to return to.  However, many have delayed pursuing this financial objective, due to perhaps more pressing matters, until now.

Tips to acquiring an expat mortgage

In order to avoid wasting time and indeed money, it is highly recommended that expats wanting to purchase property in the UK seek advice from specialist advisers who have the relevant cross-border experience.

They will assist clients to fulfil the criteria in an increasingly stringent mortgage environment, and benefit from established relationships with the relevant UK lenders.

It is advisable to circumvent mortgage brokers who only offer restricted products from a limited number of lenders.  It’s also important that clients ask their broker whether they are being offered just information or actual advice.  If they are providing advice, they have an obligation to find the best mortgage deal for the client.

It is also crucial to check a mortgage broker’s credentials.  Ensure they are on the FCA register and explain all the mortgages available, not just from lenders who pay them commission.

Expat mortgage FAQs

  • How much can I borrow?

This is usually the first question asked by many prospective lenders, and a good broker will guide you through the specific affordability criteria.  Factors often used include:

  • Provable income minus commitments
  • Multiples of potential rental income v monthly mortgage repayments
  • Credit score
  • Can I have any type of mortgage?

Typically, there is no limit to the kind of mortgage, whether it is interest only, repayment or a combination of both.

  • If my income isn’t paid into the UK or in a foreign currency, am I still eligible?

A large number of lenders will accept foreign accounts and currency, as long as clients can provide certified bank statements for up to six months.  Specialist brokers will usually have a currency expert on hand to consult, as currency risk can be a significant part of the investment.

  • Can I start a buy to let portfolio whilst overseas?

In short, yes.  Experienced brokers will advise you through the entire process, including the tax implications, as well as distance limitations that may arise.

Consequently, as demand for UK property skyrockets, by consulting a specialist adviser and being aware of the extra hurdles they will have to face, expatriates will move closer to joining the UK property ladder.

Contact deVere Mortgages here

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