Can British Expats get a UK Mortgage?

It is common for British expatriates to want to buy a property in the UK, especially if they plan on returning at some point.

UK mortgages for expats are certainly possible. However, you should be aware that you will face more of a challenge when securing an overseas mortgage as a current or returning expat. This is because most lenders are not set up for the unique situations that expats find themselves in.

Due to the lending criteria, UK high street banks often won’t lend to expats. If they do, they may offer less than favourable interest rates. For a British expat, this can often be quite frustrating.

Mortgage providers are often reluctant to lend to customers with no UK fixed address for the last three years. Most expats will find themselves in this position unless they have kept a fixed address in the UK or have only been abroad on a short-term contract.

Another thing to consider is your credit score, which is tied to your credit history. Your credit score is used by banks when deciding whether or not to lend to you. Even if you had a perfect credit score when you left the UK, the chances are it has dropped since being abroad.

Your credit score doesn’t follow you outside of the UK. So, if you have left the UK, there will be no credit history for a credit reference agency to track. However, you can take steps to improve your credit score before filling out your mortgage application. Read our in-depth guide for returning UK citizens to learn more about other considerations you should be thinking about before coming back to the UK.

For those returning expats, forward planning is essential, as it gives you the best possible chance of getting a mortgage. Plus, it will open up your options and possibly help you secure better mortgage rates.

Although there is more involved, expats should not be put off as there are options available. For example, a specialist expat mortgage broker can help you secure competitive rates that high street lenders cannot offer.

UK Mortgages for Non-Residents

UK mortgages for foreign nationals are a little harder to secure, and the process is more complex.

Risk is the determining factor for mortgage lenders when deciding if they will lend to you and how much they are willing to lend. This applies to both residents and non-residents for a UK mortgage.

Following the 2008 banking crisis, lenders are more strict about who they lend to and how much they will lend. Lenders now take extra measures to ensure the borrower is less likely to default on their mortgage repayments.

UK mortgage lenders consider Non-UK residents a higher risk, making it harder for them to buy a property in the UK. UK mortgages for non-residents exist, but the borrowing requirements are different. Mortgage lenders will typically ask for:

• Proof of UK employment/earnings
• A clean and traceable credit history
• A mortgage term that does not exceed your retirement age
• Hold a UK bank account

Be aware that the mortgage deposit for non-residents is often higher at around 25% of the property’s total value.

In most cases, non-residents pay the same taxes as UK nationals. Stamp duty is paid at the same rate, as isCapital Gains tax if the property is sold for profit. If you own a buy-to-let property, rental income is also taxed in the same way as it is for UK-based landlords.

How to get a UK Expat Mortgage

Buying an overseas property can be challenging. Depending on your situation, you may be able to get a UK mortgage for expats from a high-street mortgage provider.

The trouble is, most UK lenders are simply not set up to deal with people currently living outside the UK or those who have been gone for an extended period. Still, plenty of lenders will consider an expat mortgage application.

Dealing with a specialist broker is often the best way to find expat mortgage lenders and secure the best expat mortgage deals. Brokers can access products and rates not advertised by the lender to the public. This means you will have more options and better rates than you would get if you went direct.

The products offered by expat mortgage lenders work the same way as a standard mortgage. However, these specialist lenders tend to carry out more checks, and the eligibility requirements differ from a standard residential mortgage.

There are also the added costs to consider. For example, the expat mortgage deposit requirements tend to be higher.

Most expat mortgage providers will typically ask for 25% of the property’s value, but this can vary. Of course, the higher your deposit, the more likely you are to have your application accepted. A higher deposit often means you have access to better mortgage deals and rates. With interest rates on the rise, it may be harder to secure an expat mortgage.

UK Buy-to-Let Mortgages for Expats

Expat buy-to-let mortgages allow you to purchase a property and rent it out to tenants.

Buy-to-let properties are a popular choice for those looking to invest in the UK property market or for UK expats who need a place to live when they return.

The mortgage deposit for a buy-to-let expat property is often much higher than it is for a residential property. Most mortgage providers require a 40% deposit.

Getting a buy-to-let mortgage in the UK for foreigners is challenging as they face stricter eligibility criteria. Most UK lenders won’t offer these types of mortgage products to foreign nationals. Working with a specialist expat mortgage broker is one of the best ways to secure this type of mortgage.

Another property investment to consider is social housing. Find out more about the advantages of social housing for investors.

Where should I buy a property with my UK Expat Mortgage?

If you’re a previous UK resident, you’ll know all about the north/south divide. For non-UK natives, house prices can vary dramatically depending on where in the UK you choose to purchase a property. Considerations should be made regarding the desirability of the area you’re looking at, as well as the potential growth a property could attain.

For example, homes in the north of the UK tend to increase in value at a slower rate than in the south. Read more about the north/south property divide before making your decision.

How to apply for a UK Expat Mortgage

For UK expats and non-residents, seeking advice from a specialist is essential due to the complexities of the expat mortgage market.

An expat mortgage specialist can help you get the right product at the best possible rate and guide you through the application process. Whether you are interested in securing a residential or investment property with a UK expat mortgage, Holborn Assets can help.

We offer a complete end-to-end solution for residents and non-residents looking for an expat mortgage in the UK. Our specialists have access to a wide range of products and can help secure a mortgage at the best possible rates. We even take care of the paperwork for you. Holborn Assets are UK expat mortgage brokers you can trust.

To find out how we can help you, contact us by filling out a quick form. One of our experts will be in touch to guide you through the process.