Whether it’s a buy-to-let investment or a residential home for your family or future return, remortgaging can be a complex process when you’re an expat. But don’t worry – we’re here to guide you through it.

At UK Expat Mortgage, we specialise in helping expats navigate the intricacies of remortgaging their UK properties. In this article, we’ll explore everything you need to know about remortgaging as an expat, including the reasons why you might want to remortgage, the eligibility criteria, the application process, and the key factors that lenders consider.

Key takeaways:

• Foreign currency haircuts: if you’re now earning in a foreign currency, you’ll need to factor in a ‘haircut’ to your income for affordability calculations. For USD and Euros, it’s generally 10-15%, whereas for any other currency it’s typically 20%.
• You’ll need your documents certified and will need to provide more documents than standard to evidence your employment and income (a broker can help you with this).
• Allow plenty of time, as underwriting generally takes longer compared to UK resident mortgages.
• For buy to lets: be aware you may now fall short on rental ICR (Interest Cover Ratio) at higher interest rates, so you may need to review rental rates.
• You may wish to explore remortgaging to an interest only expat mortgage now you’re overseas.
• Working with a specialist expat mortgage broker, like ourselves, can significantly speed up and streamline the process.

Why Remortgage as an Expat?

The most pressing reason to remortgage as an expat is that your existing lender is unlikely to be the best option for you once you move overseas and your current arrangement defaults onto a SVR (Standard Variable Rate). 

In many cases, your lender may not offer you a new product once your current deal expires since you’re now living overseas, but at the very least, they’re unlikely to offer you the best terms.

Here are some other key factors and reasons to consider:

Access Equity for Investment or Renovations

If you’ve built up equity in your UK property over time, remortgaging can provide you with a lump sum of cash that you can use for various purposes, such as investing in another property, funding home renovations, or even paying off other debts.

Secure a Better Interest Rate

Interest rates can fluctuate over time, and if you’re on a variable rate or your fixed-rate period is about to end, remortgaging can help you secure a better interest rate, potentially saving you thousands of pounds over the life of your mortgage.

Switch from an Interest-Only to a Repayment Mortgage

If you initially took out an interest-only mortgage, remortgaging can allow you to switch to a repayment mortgage, which means you’ll be paying off the capital as well as the interest, helping you build equity in your property more quickly.

Consolidate Debts

Remortgaging can be a way to consolidate multiple debts, such as credit cards or personal loans, into a single, more manageable mortgage payment, often at a lower interest rate.

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Eligibility Criteria for Expat Remortgages

Before you can remortgage your UK property as an expat, you’ll need to meet certain eligibility criteria set by lenders. Here are some of the key requirements:

• Most UK lenders will require you to be a British citizen or hold a valid UK residency permit.
  
• Lenders will scrutinise your employment status and income to determine your affordability. If you’re employed, you’ll need to provide proof of employment, such as a contract or payslips. If you’re self-employed, you’ll need to furnish tax returns and financial statements that demonstrate a stable income – it’s also generally a lot more difficult when you’re self-employed, but not impossible.
  
• Lenders will typically require you to have a minimum amount of equity in your property, usually at least 25% of its value. This equity acts as security for the lender and can help you secure better interest rates.
  
• Lenders will review your credit history to assess your financial responsibility and ensure that you’re a low-risk borrower. A good credit score can improve your chances of being approved for a remortgage and securing favourable terms. They’ll look at both your UK credit history (if you still have a traceable one) and your credit score in your country of residence.

The Remortgaging Process for Expats

Now that you understand the reasons for remortgaging and the eligibility criteria, let’s walk through the remortgaging process for expats.

Finding the Right Lender

Not all lenders offer remortgages to expats, and those that do may have varying requirements and terms. That’s where we come in – our team at UK Expat Mortgage will scour the market to find the best lender for your specific circumstances. We have relationships with specialist lenders, international building societies and private banks to ensure we’re finding the best solution – but we don’t rule out high street bank options either: whichever provides the best terms for you.

Gathering Documentation

Once we’ve identified a suitable lender, you’ll need to provide a range of documentation to support your remortgage application. This typically includes proof of identity, proof of income, bank statements, and details about your current mortgage and property.

Valuation and Underwriting

The lender will arrange for a valuation of your property to determine its current market value. They’ll also conduct an underwriting process, which involves assessing your financial situation, employment history, and credit score to determine your risk level and the appropriate mortgage terms.

Completion and Remortgage

If your remortgage application is approved, the lender will provide you with the new mortgage terms and conditions. Once you’ve agreed to these, the remortgage process can be completed, and you’ll start making payments on your new mortgage.

Key Considerations for Expat Remortgages

While the remortgaging process for expats is similar to a standard remortgage, there are a few key considerations that are unique to your situation.

Currency Fluctuations

If you’re earning income in a foreign currency, fluctuations in exchange rates can impact your ability to make mortgage payments in pounds sterling. Lenders will typically require you to have a stable income in a major currency, such as US dollars or euros. Even then, they’ll typically apply a 10% deduction to your income, and for other currencies it’s likely to be 20%.

Tax Implications

Depending on your residency status and the tax laws in the country where you reside, there may be tax implications associated with remortgaging your UK property. It’s crucial to seek advice from a qualified tax professional to ensure you’re fully compliant.

Property Management

If you’re remortgaging a buy-to-let property, you’ll need to consider how you’ll manage it from abroad. Many expats choose to hire a property management company to handle day-to-day tasks like tenant screening, maintenance, and rent collection.

Why Choose UK Expat Mortgage?

At UK Expat Mortgage, we pride ourselves on our expertise in arranging remortgages for expats who own properties in the UK. 

We understand the unique challenges you face, and we’re committed to making the process as smooth and stress-free as possible.

Our team of experienced mortgage advisors will work closely with you and around your time zones to understand your specific circumstances and find the best remortgage solution. We have strong relationships with a wide range of lenders, giving us access to competitive rates and flexible terms.

But don’t just take our word for it – check out our testimonials from satisfied clients who have successfully navigated the expat remortgaging process with our help.

What Happens to My Mortgage if I Move Abroad?

If you’re planning to move abroad while still holding a mortgage on a UK property, it’s essential to inform your lender about your change in circumstances. 

Lenders have different policies and requirements for borrowers who move overseas, and failing to notify them can be a breach of your mortgage terms.

Most lenders will let you keep your existing mortgage arrangement as is, until your deal expires. Then, they may not offer you a new product, at which point it’s essential to remortgage. Even if they do provide you with an option, it’s unlikely to be the best on the market – speaking to a specialist broker to compare your options is often recommended.

Can I Remortgage While Living Abroad?

Yes, it is possible to remortgage your UK property while living abroad as an expat. 

Remortgaging can be a strategic move for expats, allowing you to access equity, secure better interest rates, or switch to a more suitable mortgage product.

However, the process of remortgaging as an expat can be more complex compared to doing so while living in the UK. Lenders may have additional requirements and eligibility criteria for expat borrowers, such as:

• Proof of stable income and employment overseas
• Meeting minimum income thresholds
• Providing additional documentation (e.g., residency permits, work visas)
• Satisfying higher deposit or equity requirements

It’s a good idea to work with a mortgage broker specialising in expat remortgages, as they can help you navigate the process, identify lenders that cater to expat borrowers, and ensure that you meet the necessary criteria.

When remortgaging as an expat, you may also need to consider factors such as currency exchange rates, tax implications, and property management arrangements if the property is a buy-to-let investment.

Are Expat Mortgages More Expensive?

Expat mortgages can generally be slightly more expensive than standard mortgages for UK residents. This is because lending to expats presents a greater risk to your lender, so they offset this by increasing their profit margin.

• You may pay a slightly higher interest rate
• You may pay slightly higher initial product fees
• You may pay a higher brokerage fee if getting advice

Despite this, the options are still very competitive, and it’s essential to review your options and not default onto your lender’s standard rate if the interest rate is going to be significantly higher than market rates.

Do I Need to Tell My Mortgage Lender if I Move Abroad?

Yes, it is essential to inform your mortgage lender if you plan to move abroad, even if it’s only for a temporary period. Failing to notify your lender about your change in circumstances can be considered a breach of your mortgage terms and conditions, which could potentially lead to severe consequences, such as the lender demanding immediate repayment of the outstanding mortgage balance.

How Much Deposit Do I Need for an Expat Mortgage in the UK?

The deposit requirements for expat mortgages in the UK are typically higher than for standard mortgages. Most lenders will require a minimum deposit of 25% of the property’s value, especially for BTLs, although some may accept as low as 20% in certain circumstances.