There are two types of expat mortgages that have come into demand in the UK. The first being mortgages for UK nationals living and working abroad.
The second is mortgages for either UK or foreign expats living in the UK on foreign resources which are usually the main source of income.
Understanding the context in which the relevant mortgages are being discussed is important when seeking out property finance.
UK Nationals Living and Working Abroad
There are multiple legitimate reasons why UK nationals go abroad to live and work. There are some industries that by their very nature would demand this.
Petroleum and mining engineers are a good example. Maritime workers and oil industry employees move around globally too. Airline pilots, language educators, and archaeologists can be added to the list and these are only a few.
These professionals, while living and working abroad, still have their roots firmly entrenched in the UK. Most will still hold a UK bank account, in fact, many will return home as they get older. In fact, most will return to the UK once they retire.
This group of expatriates can sometimes struggle to get a mortgage for a plethora of reasons. Financial institutions are noticeably shy when it comes to providing mortgages for individuals that are not permanently resident in the UK.
The first problem is establishing the sustainability of an expat income and the second is establishing risk. The first may be a little easier to establish, especially if the expat works for an established and recognised company and for a long period of time.
Establishing risk is problematic because when a borrower lives outside of the UK, their credit rating can be difficult or impossible to trace.
Expat Mortgages and Additional Rules
That does not mean that no one will lend to an expat. It means that there will be a multitude of additional requirements. Additional checks and balances will need to be put in place before any expat mortgages are approved. Interestingly, there are some mainstream financial institutions that will offer this type of lending.
Overall, however, finding affordable expat mortgages is best left to an experienced specialist.
Expats mostly seek out buy-to-let mortgages. These appear to be the easiest mortgages to obtain, however, lenders want to be sure of several rules. Although you may be an expat borrower at the time the mortgage is taken out, will you still hold this status once it completes?
Expat borrowers will really struggle to find a mortgage if they earn less than £60,000 per year. This appears to be the lower threshold for mainstream lenders and most private lenders will require the borrower to be a high net worth individual. Mainstream lenders are also unlikely to lend more than £3 million. For expats seeking to borrow more than this, they would most likely be seeking private finance anyway.
The rules, however, go on. There are countries that the expat may be resident in that are on a restricted list regardless of income. When this happens, mainstream lenders will not lend to them regardless of their income.
What formulae are used to place countries onto and remove countries from the list is still a closely held secret, but it is worth watching changes in the lists. This will give those seeking out these kinds of mortgages an idea of what obstacles lie ahead.
Aside from income and risk, there will be requirements that relate directly to the property. Lenders are likely to stipulate that a property may not be used for HMO. At a time when the rental market is not particularly buoyant, this excludes the potential for maximising rental income in this way.
If having a list of restricted countries is not already tough going, mainstream lenders also have a list of restricted properties. This means that the options on properties to buy becomes reduced too.
Sometimes it may simply be better to approach a broker that specialises in difficult mortgages and a broker that can access private lenders will be the better route to go.
Expats From Abroad
Expats from abroad living in the UK experience similar problems. Even though they may be earning a UK salary from a UK-based employer, establishing risk may also be a problem. Financial institutions worry about them simply leaving. After all, what they want is a customer, not a house. It can be difficult to prove past credit history until you’ve lived in a country for six years, especially when you don’t meet other criteria for a standard mortgage.
Speaking to a knowledgeable mortgage and finance advisor is possibly the best route to take. At Belgravia Property Finance, you will receive unbiased professional advice and access to non-conventional lenders that may be able to help you.Tags: expat mortgages / property finance