Getting a UK mortgage with foreign currency income can be challenging – especially if that currency is not either Euros or USD.
Mortgage lenders apply what’s known in the industry as ‘hair cutting’ to your salary – they slice off a percentage to account for currency fluctuations and potential weaknesses.
With Euros and USD, you might expect a 10% reduction to your income for affordability, but for any other currency it’s more likely to be 20%.
It makes speaking to a specialised expat mortgage broker all the more important – we can negotiate the best income multiples for your application and secure the best rates on the market while we’re at it.
The Client
This client was a British expat living in Australia. They had a rental property in the UK that had lapsed onto their lender’s SVR (standard variable rate), so he needed to remortgage.
He’d need £150k raised against the £230k property.
Note: Your bank’s SVR will generally be much more expensive than a typical mortgage deal – so it’s really important to remortgage at the end of your term and shop around when doing so.
How We Helped
Despite the haircut applied to their AUD salary, we found a lender that could offer a much better rate than their current mortgage.
However, a significant issue arose when the valuation report came back for the property: the valuer had identified it as an ex-council house.
In the current market, there are simply no mortgage lenders that will lend against ex-council houses for expats.
Knowing that this would be hugely detrimental to our client, our broker investigated the historical records of the property – dating back to the 1970s – to see if there was anything we could do.
We found that the property was actually built by a housing association – which is different to the council – and therefore should be accepted by the lender.
Thankfully, the valuer admitted their mistake, and we were able to push the case though. In fact, the underwriter at the bank stated it was the first time they’d ever seen a valuer admit to a mistake on their assessment.
Proof of address when living abroad
A final complication with this case, which is a fairly common one among expat mortgages, was the clients’ proof of address.
For applicants living abroad, there can be extra due diligence checks. This client was living with family in Australia, which meant their name wasn’t recorded on the household bills.
After negotiations with the lender, we managed to persuade them to accept an ID document outside of their typical criteria – extremely rare for a mortgage application, especially for a non-resident applicant.
It goes to show the value of using a specialist expat mortgage broker, and the strength in having our support by your side throughout your entire mortgage process.
