Getting a Mortgage After or While Living Abroad

Can I Get a Mortgage if I Live Abroad?

1. How easy is it to buy or remortgage a property in the UK if you are living abroad

In broad terms it is easy, but it depends where you live, how your income is made up and what you want to buy. The number of lenders in the market is still very small, compared to 10 years ago, before the 2008/9 crash, but there is still a good range of expat mortgage types to choose from including Base Rate trackers, discounted variable and fixed rates, so most people can find the right expat loan for their circumstances.

Salaried expats have the greatest choice, but lenders will often exclude the self-employed, on the basis that income cannot be verified to a high enough standard, unless it is audited by a reputable accountancy practice.

Expat buyers do not always appreciate that in the vast majority of cases they will need an expat buy to let loan – expat main home loans are available, but very hard to arrange, as lenders will want to see evidence close family are living in the house.  Since most expats work aboard and cannot live in two places, for the majority, a buy to let is the more appropriate solution.

Buyers need to budget on at least a 25% deposit, often more, depending upon which kind of lender is available, i.e. a UK bank or building society. Banks tend to use an affordability model to underwrite, building societies underwrite on the basis of rental income. As the UK Regulator now lays down high hurdle (stress test) rates for rental income, in many cases, a loan of 65% is the maximum available from a building society, whereas high earners can often borrow more, if we can place their business with a bank, as the salary will drive the lending limits.

Lenders tend to prefer mainstream property types, but will still lend on new builds. In general, a mortgage application stands the best chance of success if it is on a traditional house type, such as a terraced,  semi or detached house. Flats above shops are usually rejected,  but we a seeing a softening in lender attitudes, as so many new build  city centre developments will have a supermarket on the ground floor.

2. What kind of challenges do expats seeking a mortgage face?

The main challenge is finding a broker or a lender who genuinely understands the market and is experienced in it. Many people start applications and pay an initial non-refundable fee to a local broker, only to find the application does not proceed. We have a “no offer no fee” approach, so clients know they do not have to pay until they know the purchase is proceeding.

Other challenges can be logistical – the requirements for accurate documentation are just as onerous as onshore, and in fact getting a correctly certified passport is often an issue, if a client lives in a remote area with no access to international lawyers, accountants or diplomats. Big multinational companies such as Saudi Aramco, British Aerospace in Saudi Arabia, Accenture, etc. will have standard formats for issuing employee references which seldom match the requirements laid down by a lender, who is trying to underwrite on the basis of very specific individual information needs, so careful negotiation with a lender may be needed.

3. Why does the country you live in affect your mortgage prospects?

There are many reasons, the most obvious being any country subject to sanctions will not be approved by lenders for international mortgage business. Equally, some countries may have a weaker reputation for regulation, meaning documentation quality is likely to be suspect. Many African countries fall into this category.  Expats living in some Eastern European counties will find it hard to secure mortgage, as lenders worry about bribery and corruption impacting upon the reliability of papers which are important to meet domestic compliance obligations. The country which many find hardest to understand is Australia, where few expat lenders operate.  The issue in this instance is local regulation. In particular, legislation such as the Corporation Act is interpreted by international banks in particular in such a way that most choose not to engage with expats living there, although some smaller UK domestic banks with no physical international subsidiaries have chosen a more pragmatic interpretation of the rules, so we can offer mortgages to expats living in Australia.