You may have moved abroad to enjoy a better lifestyle, take advantage of a job opportunity, experience a different culture or benefit from some warmer weather. But there may come a time when you want to buy a property back in the UK. Your family might have stayed behind and you want to buy them a home, for example. Another example is buying an investment property, which allows you to earn an income in the UK while you’re abroad. Or perhaps you want to buy a home ready to move into on your return to the UK. Whatever your reason, you can buy a property in the UK while living abroad using an expat mortgage.
What is an expat mortgage?
This type of mortgage enables UK citizens who are living abroad to buy a property in the UK. Expat mortgages are similar to standard residential mortgages except that the eligibility criteria are stricter and the rates are higher. This is because of the increased risk level to lenders due to your overseas status.
What can you use an expat mortgage for?
As an expat, you can apply for a residential mortgage or a buy-to-let mortgage.
Expat residential mortgages
When you’re living abroad but are expecting to return to the UK, you can buy a home in readiness for this. Another reason you may wish to apply for a residential mortgage is if your family has remained in the UK while you’re away and you want to buy a home in Pimlico for them. You can take out an expat residential mortgage on either a repayment or an interest-only basis.
Expat buy-to-let mortgages
Having a buy-to-let investment property in the UK is a good way to earn an income while you’re living abroad. You’ll usually be offered a lower loan-to-value (LTV) ratio for an expat buy-to-let mortgage compared with a residential one. For example, lenders generally offer a maximum LTV of 60%. This type of mortgage tends to be available on an interest-only basis.
Remortgaging as an expat
You can also remortgage a property that you already own in the UK. For example, you may be in a position to pay off a large chunk of the capital and want to remortgage to benefit from a lower LTV. Or you’re not planning to return to your home for the foreseeable future so wish to remortgage to a buy-to-let deal. That way, you can earn an income instead of leaving your property sitting empty.
Are you eligible for an expat mortgage?
Applying for a mortgage is more complicated when you’re an expat. Stricter criteria are applied by lenders because you’re considered to be a higher risk as a borrower living overseas. One reason is that the income you earn is paid in a foreign currency and it’s affected by fluctuating exchange rates. Your employment status can also affect your eligibility. For example, if you’re employed rather than self-employed, lenders tend to prefer your employer to be a multi-national company.
A lack of credit history may be an issue for you, depending on how long you’ve lived abroad. Your country of residence is also important as lenders tend to favour some countries over others for overseas borrowers. Anti-money laundering laws apply so you have to prove the source of your deposit. Generally, expat mortgage lenders expect you to have a UK bank account and an address in the UK. The latter can simply be a family member’s address that you use for correspondence.
Our expat mortgage specialists will discuss your situation and mortgage requirements in detail with you. They will advise you on the best ways to prepare ahead of time for your application. When you’re ready, your mortgage application will be customised to give you the best chance of success with the right lender.
Expat mortgage deposit requirements
You’re usually required to have a deposit of at least 25% for a UK expat mortgage. This can vary depending on the lender and your circumstances. As with any mortgage, the more deposit you can pay, the happier the lender will be as you will reduce their level of risk. By doing this, you’ll benefit from a wider range of mortgage options and better rates.
If you’re unable to provide a 25% deposit, speak with one of our expat mortgage brokers. We have formed good relationships with specialist lenders handling mortgages for expats. They offer more flexibility and may be willing to offer you a higher LTV. For example, they may consider an LTV of 90%, meaning you’d only need to pay a 10% deposit.
As mentioned above, lenders have to take anti-money laundering laws into account. This means you have to provide proof of where your deposit funds have come from.
Seek expert guidance on mortgages for expats
Our qualified brokers are on hand to offer specialist advice on your expat mortgage queries. They can talk you through the process and gain a detailed understanding of your circumstances. Highly experienced in this field, they will advise you on all of the documentation needed. That way, you can ensure that everything is gathered together before submitting your application. The application will be tailor-made by your broker and the right lender approached to ensure a successful outcome. Simply give us a call on 01322 907 000 to speak with one of our mortgage brokers in London, Kent or Edinburgh about your expat mortgage needs.