Expat Mortgages

You can generally make overpayments of up to 10% of the outstanding loan amount each year without incurring a penalty fee. Any overpayments made above the lender’s limit will incur an early repayment charge.

Whilst it’s harder to be accepted for an expat mortgage in the UK with bad credit, it is possible. We deal with specialist lenders who offer more flexible criteria. They look at your overall financial stability and use manual underwriting instead of an automated process. You may have to pay a larger deposit and a higher interest rate, depending on the severity of your bad credit issues, to help mitigate their risk. As long as you meet their criteria, you should be able to secure a mortgage despite having bad credit issues.

Our mortgage brokers know which lenders specialise in bad credit mortgages and offer expat lending. Once your broker has reviewed your case, they’ll match you with the most suitable lender.

Rates for an expat mortgage are higher than those for a standard mortgage because you’re considered to be more of a risk to the lender as a borrower living overseas. Rates can vary significantly depending on your circumstances and how the mortgage is structured.

Your country of residence, the currency you earn in and the structure of your earnings affect the complexity of your application and the level of risk for the lender. For example, if you’re self-employed, receive commission payments or regular bonuses or are paid in multiple currencies, your case will be more complex and require a more tailored solution. As such, this can increase the mortgage rate you’ll need to pay and you may incur higher lender fees, too.

No, an expat mortgage enables you to buy a property in the UK while you’re living overseas. An overseas mortgage, on the other hand, allows you to buy a property that’s outside of the UK. We cannot arrange an overseas mortgage for you ourselves but we will be able to refer you to a third party that does arrange them.

Lenders typically ask for a 25% deposit for an expat mortgage. The requirement varies depending on the property type, your country of residence, the currency, your income profile and the lender’s criteria. If you are a returning expat with a confirmed return date, you may be able to pay a lower deposit, such as 15–20%.

However, the more deposit you can pay, the less risk you pose for a lender, helping to strengthen your application. A bigger deposit gives you access to more products and these generally come with better rates.

Most major currencies are accepted by lenders but some only accept certain ones so be sure to check this first. Lenders have to take the fluctuating exchange rates into account as this can affect your monthly repayment amounts.

To lower the risk of fluctuations, they may apply a mortgage ‘haircut’. This is a percentage discount that is applied to your foreign currency income. It protects against future exchange rate drops when calculating how much you can borrow. For example, if you earn the equivalent of £100,000 in a foreign currency and the lender applies a haircut of 20%, your maximum borrowing amount will be based on £80,000.

The size of the mortgage haircut varies between lenders. Most high street lenders, for example, apply a 20–25% haircut to a foreign income. Major lenders may apply a low discount, such as 10%, to a more stable foreign currency, while increasing it for a higher-risk currency.

An expat mortgage is more complex to arrange than a standard mortgage because the lender has to base their assessment on the fact that you live overseas. They look carefully at your income, especially if you’re paid in a foreign currency, to ensure that the mortgage remains affordable if exchange rates fluctuate. This means they can be more conservative in the amount they agree to lend you.

They need to verify both your overseas income and your credit profile, which is more complicated than a standard verification process. The lender also asks for a larger deposit to help mitigate their risk and has to consider the risk posed by the country you’re living in.

Our mortgage brokers ensure that your application is presented to the right expat mortgage lender for your needs. They guide you on the documentation needed to meet the lender’s criteria so that delays are avoided and you can benefit from a smooth mortgage process.

You qualify as an expat for a mortgage if you’re a UK citizen who lives abroad and you want to buy a main residence or a buy-to-let property in the UK.

Not all lenders offer expat mortgages and you’ll need to meet the stricter criteria of those who do but our mortgage brokers are here to help you with this.

Most lenders require you to have a UK bank account, with some preferring you to open one in advance of your application and others during the application process. Specialist lenders, however, can offer you a mortgage without requiring you to have a UK bank account. Our mortgage brokers can approach the right lenders on your behalf accordingly.

Yes, you can arrange the entire mortgage while you’re living abroad. Everything from the quote to full mortgage approval can be done without you having to travel back to the UK. Our mortgage brokers can guide you through the process from start to finish, including the documents you need to scan, how to upload them securely and what needs to be signed using an e-signature.

As an expat living abroad, you’ll need to meet stricter lending criteria when applying for a UK mortgage. The lender has to verify your overseas income and credit profile, account for currency fluctuations and weigh up the risk of the country you’re residing in and the stability of its currency. You’ll need to pay a higher deposit, too. The type of property you’re buying, whether a main residence or a buy-to-let property, will also affect the eligibility criteria.

Yes, you can arrange a buy-to-let mortgage as an expat. You may wish to remortgage your former home in the UK to a buy-to-let mortgage. This will enable you to keep your property as a long-term investment, cover the mortgage payments with the rental income and ensure your property stays occupied and maintained. Or you may wish to buy a UK property purely as a rental investment.

Whichever option you’re considering, the criteria for a buy-to-let mortgage differs from a standard residential mortgage. The affordability is based on the projected rental income rather than just your personal income. The property type and tenant demand are taken into consideration as well as your circumstances. You may be required to pay a higher deposit and you usually need to put UK-based property management in place.

Common challenges you might face as an expat applying for a UK mortgage are ones concerning your income and assets being held in different countries, higher deposit requirements, currency fluctuations and complex ownership structures.

• Foreign income and assets: Lenders vary in their willingness to accept overseas income, especially if it is earned from different sources. Overseas income is harder to verify and lenders are often faced with untranslated foreign employment contracts, having to verify overseas tax returns and needing to carry out manual underwriting for international bank statements instead of using standard automated checks. Specialist lenders offer more flexibility with this and our mortgage brokers will approach the right ones for your situation.
• Higher deposit requirements: Generally, you need to pay a 25% deposit. This requirement can depend on a lender’s appetite for risk and your circumstances. Some lenders may insist on a higher deposit amount but others may be willing to lower it in some cases. For example, if you are returning to the UK and have a confirmed date for this.
• Currency fluctuations: These can affect your income and ability to make your monthly mortgage repayments. Lenders usually apply stricter stress testing and a mortgage ‘haircut’ to account for these fluctuations. This can reduce how much you can borrow. More stable currencies, such as Euros and USD, are widely accepted and subject to lower haircuts. Volatile currencies, on the other hand, either have larger haircuts applied or are often rejected.
• Ownership structures: A complex ownership structure can add to the challenge of arranging an expat mortgage. For example, if you’re holding assets in a trust or an offshore entity, the lender has to carry out enhanced legal, regulatory and financial checks to verify ownership and trace the source of the funds.

You’ll need to provide the lender with proof of your income, such as payslips if you’re employed or accounts for a specified period if you’re self-employed. If you’re employed, it’s beneficial if you work for a multinational company. If you’re self-employed, you need to use an internationally recognised accountant.

The lender will convert your overseas income into sterling. This can be done using the current exchange rate as well as historic averages. To allow for fluctuations in exchange rates, they may apply a ‘haircut’ when calculating how much you can borrow. This protects against exchange rate drops in the future but reduces your borrowing potential as a result.

Lenders vary in the haircut percentage they apply. High street lenders generally use a 20–25% haircut on a foreign income. A lower discount, such as 10%, may be applied to a more stable foreign currency by major lenders and they may apply a higher haircut to more volatile currencies.

Yes, when you’re living outside of the UK, you can still arrange a mortgage or remortgage in the UK. Bear in mind it’s more complex as an expat but lenders offer expat mortgages that enable you to purchase a home or a buy-to-let property in the UK. Your overseas income, credit history and currency risk have to be assessed and there’s a higher deposit requirement than for a standard residential mortgage.

Not all lenders offer these mortgages so your choice of lender is more limited but our mortgage brokers will assess your situation and approach the right ones accordingly.

It’s not essential to have a UK credit history when applying for an expat mortgage, although high street lenders prefer you to have an active credit file. Specialist lenders accept applicants with a thin or absent UK credit history. They use manual underwriting instead of an automated process so that your overall financial profile can be carefully assessed.

To help boost your application, it’s recommended to retain a financial link with the UK. For example, to be associated with a residential address in the UK, to keep a UK bank account open or to use a credit card obtained through a UK provider.

Lenders’ criteria vary but you generally need to provide the following documents to apply for an expat mortgage:

• Proof of ID, such as your passport.
• Proof of your overseas address, such as bank statements, utility bills or a tenancy agreement.
• Recent bank statements, usually for the last 3 to 6 months.
• The property details, including whether it’s for residential or buy-to-let purposes and the purchase price, or your existing mortgage details if you already own a property and wish to remortgage.
• Proof of your deposit, with evidence of the source of the funds to be used.
• Evidence of your income, such as recent payslips and an employment contract or your accounts and tax returns if you’re self-employed.
• A credit report from your country of residence and, if possible, evidence of your UK credit history.

The amount you can borrow as an expat depends on various factors. These include your income and expenditure, the property type, the size of your deposit and the lender’s income assessment criteria. If you earn in multiple currencies or have variable aspects to your earnings, such as taking on contract work or receiving regular commission or bonus payments, this can make the assessment more complex.

Foreign currency income

As an expat, your foreign currency income has to be stress-tested to allow for exchange rate fluctuations. Your overseas earnings are first converted to sterling using the current exchange rate or a historic average. A mortgage ‘haircut’ is then typically applied to lower the risk of fluctuations. This discount percentage varies between lenders and it reduces the amount you can borrow. Therefore, make sure you’re aware of how the lender is going to assess your income before proceeding.

Income multiplier

An income multiplier will then be used to calculate how much you can borrow. This tends to be up to 4% or 5% of your annual income, although some lenders offer less than this while others are prepared to use a higher income multiplier. It’s often determined by the stability of the currency you earn in and whether you’re employed and have a long-term contract or are self-employed. Our mortgage brokers will assess your income and, with expert knowledge of lenders’ criteria for expat mortgages, will present your application to the most suitable lender to help maximise your borrowing potential.

Projected rental income

If you’re applying for a buy-to-let expat mortgage, the amount you can borrow is usually based on the projected rental income instead of your normal earnings. Typically, an interest coverage ratio (ICR) is used to ensure that the anticipated rental income covers the mortgage payments by a specific amount. The ICR used is usually 125%, although some lenders require a higher amount of 145%.

Yes, you can remortgage your UK property while you’re living abroad. Many expats choose to keep their properties despite moving overseas and there may be a time when you want to change to a better deal or to release some equity from your property. As you no longer live in the UK, you may need to use a specialist expat remortgage product for this and the process can be more complex than remortgaging as a UK resident. There will be similar document requirements to those needed when buying a property as an expat.

If you decide to rent your home out while you’re abroad, you need to inform your lender. They may agree to give you consent to let if this is to be a short-term arrangement, such as 6 to 24 months. However, for a longer period than this, you’ll need to remortgage to an expat buy-to-let mortgage. That way, you can ensure your property isn’t left standing empty, that it will be maintained while you’re away and that your mortgage payments are covered.

Fluctuations in foreign currencies can affect the affordability of your monthly mortgage payments. Additional stress testing is usually applied by lenders to take any exchange rate fluctuations into account. A discount percentage may be applied to your income when assessing your affordability to allow for these fluctuations. This is known as a mortgage ‘haircut’ and it can impact your borrowing potential.

Not all lenders accept every currency as some are more volatile and pose more of a risk than others. For example, Euros and USD are considered to be stable currencies and are widely accepted. Our mortgage brokers will approach the right lenders to match your circumstances.