Hopes for many British expat workers to return home are being scuppered because banks and building societies are refusing to make mortgage offers.
Mortgage brokerage firm Springtide Capital says inquiries from expats have doubled this year because they are struggling to find a mortgage provider as they lack a recent financial UK history.
Many mortgage firms have tightened their criteria for lending in a bid to balance their books and to avoid arrears and bad debts.
Henry Knight, Springtide’s managing director, said: “We have noticed a significant increase in enquiries from expats since the beginning of the year and have been surprised at how few lenders are currently offering products to meet their requirements.”
He says that mortgage lenders in the UK are taking too narrow a view of potential expat clients since many of them wanting to take out a mortgage are generally cash rich and are aided financially by blue chip employers.
Expat mortgages
Mr Knight says that the mortgage firms are using computerised underwriting systems which automatically refuse applications from expats with no UK credit history as they are viewed as too risky for borrowing money.
Halifax and Lloyds have recently stopped lending to expats which says Springtide, means there is now a market for small lenders using a personal service rather than the impersonal approach taken by bigger lenders.
The firm points to Market Harborough Building Society as one of the few mortgage providers willing to lend to expats.
The lack of a UK address is often the key failing for expats seeking a mortgage – which has seen a sharp rise in demand for mail forwarding services which scan the expat’s post and emails them the details.
Some services give expats a base in Britain while they are overseas so they can maintain a credit history.
Credit for expats
However, the issue of struggling to find a mortgage provider works both ways for expats. One credit reference agency says the lack of cross border information swapping means that many perfectly credit-worthy expats are being refused loans, credit cards and mortgages when they move overseas.
Equifax says the lack of international credit rating agencies which offer checks and credit scores is hampering those expats looking for a range of financial products.
Neil Munroe, a director at Equifax, said there are banks and finance companies in some countries willing to accept the credit report for a British expat but generally many are unwilling to do so because of translation issues and differences in required data.
He advises expats to find a British-owned finance company which will be more likely to accept a UK credit report.
