A foreign currency mortgage is simply a mortgage secured against your foreign currency earnings. Whether just part of your earnings are in a foreign currency or it’s your entire income stream, it’s entirely possible to secure a mortgage against it – you just need to approach the right lenders.

It’s important to know that not all lenders accept foreign currency earnings on a mortgage application – particularly high-street banks – and it also varies depending on what currency you’re earning in, where you live, and the type of income you’re earning. For example, self-employed foreign income is trickier than employed income – but still not impossible.

In this guide, we explain everything you need to know about foreign currency mortgages, from lender criteria, minimum requirements, how to apply correctly, and more.

But if you want to fast-track your understanding, please contact us to explain your situation, and one of our specialist mortgage brokers can run through your options with you in a free consultation: from how much you can borrow, to how much the costs will likely be, and much more.

Key Takeaways

• Getting a UK mortgage with foreign currency income can be challenging, but it’s not impossible.
• Specialist mortgage brokers can help you find lenders who offer attractive terms for borrowers with foreign income – even if you live outside the UK.
• Expat UK mortgages can have higher interest rates due to the added risks associated with foreign income for lenders.
• Proving your income and providing relevant documents will be crucial in your mortgage application process.
• Consulting with a mortgage advisor or specialist broker can help you find the best solution for your circumstances.

How does a foreign currency mortgage work?

A foreign currency mortgage works just like any other UK mortgage, but the calculations are made against your foreign income. With a standard UK mortgage, you can typically borrow 4.5 times your salary. This is largely the same with foreign currency mortgages, with a few caveats:

• Lenders may apply what’s called ‘hair-cutting’ to some foreign income, which is essentially deducting about 10% of your income to account for fluctuations in the exchange rate to GBP when calculating your mortgage potential.
• Although you can still borrow upwards of 4.5 times your income in many cases, it can make your income less powerful than Sterling income for your mortgage.
• Some currencies are more volatile and/or risky for lenders than others, and not all lenders work with every currency.
• Self-employed foreign currency income is trickier to place than employed – but not impossible.
• You’ll typically need more evidence of your income in the form of payslips, bank statements, employment contracts etc. with a foreign currency mortgage.
• Working with a specialist mortgage broker like ourselves can generally iron out all of these issues, and actually make the application process very straightforward, and comparable to that of a standard mortgage.
• There are also buy to let mortgages available with foreign currency income

Case Studies

5 Common Foreign Currency Mortgage Scenarios

If you have a foreign currency income and are looking to get a UK mortgage, you may face some common scenarios that can make it challenging to find a lender. Here are 5 of the most common examples:

1. Living and working in the UK but being paid in a foreign currency? Many lenders may be hesitant to offer you a mortgage because of the potential risks associated with fluctuating exchange rates.
2. Applying for a joint mortgage with a partner who works overseas? This scenario adds another layer of complexity, as lenders will need to assess both your income and your partner’s income, which may be in different currencies.
3. Living and working abroad with plans to buy a UK property as a buy-to-let? Buying a property as a buy-to-let can come with additional requirements and criteria, especially if you are not a UK resident.
4. Living and working abroad and buying a residential home in the UK for your family or to move back to? You don’t need to wait until you’re back in the UK, but you’ll probably need to use a broker.
5. Living and working abroad with no plans to return to the UK? Some lenders may be cautious about offering a mortgage to individuals who do not have strong ties to the UK and may view it as a higher risk.

Each of these scenarios highlights the importance of seeking advice from a specialist mortgage broker who has experience dealing with foreign income mortgage applications.

It can be very difficult to secure finance going it alone in all of these cases – but using a specialist mortgage broker actually makes it very possible. There are international building societies, specialist lenders, private banks, and even some high street banks such as HSBC that can accept applications with foreign income – you just need to find them and package your application in the right way, which is most easily done with the assistance of a broker.

4 Challenges of Getting a UK Mortgage With a Foreign Currency

1. Currency Fluctuations

One of the primary concerns for lenders is the potential impact of exchange rate fluctuations on your income. This varies depending on the currency you’re earning in and its stability, but often lenders will knock 10% off your income in the underwriting stage for calculations.

2. Language Barriers

Lenders can face difficulties in verifying your employment and contract details if you’re working for an overseas company. It can lead to misunderstandings and breakdowns in communication, which is generally why it’s good to work with an experienced broker.

3. Credit Scores

Lenders may also face difficulties in verifying your creditworthiness, especially if you have been living abroad for an extended period and haven’t maintained a UK credit record. Top tip: keep a UK bank account open when you move abroad so that you maintain a credit profile.

4. Costs

Many lenders offset the perceived risks of working with foreign income by offering higher interest rates, making the mortgage more expensive for expat borrowers and internationals. However, you can still compare expat mortgage rates with the help of a specialist mortgage broker like ourselves.

How Much Can You Borrow with a Foreign Currency Mortgage?

You can typically borrow up to 80% loan to value for residential foreign currency mortgages, and 75% for buy-to-lets. However, if you live in the UK this can be higher, and even if you don’t there can be some exceptions if you work with specialist and private lenders.

In terms of income multiples, you can generally borrow 4.5 times your income with a foreign currency mortgage, and sometimes higher. Remember though that lenders may take a reduced income figure from you to account for currency fluctuations – typically around 10%.

Generally speaking, the amount you can borrow for a foreign currency mortgage depends on several factors:

1. Employment history: Lenders will want to see a stable employment history and proof of a consistent income stream.
2. Other debts: Your existing debts, such as loans or credit card balances, will be taken into consideration.
3. Total outgoings: Lenders will assess your total outgoings, including living expenses and any financial commitments.
4. Financial dependents: If you have dependents, such as a spouse or children, this will impact the amount you can borrow.

To find out exactly how much you can borrow, it’s recommended to consult with one of our experienced mortgage brokers who can analyse your individual circumstances and provide you with personalised advice. You can book a free consultation with us any time.

Getting a Foreign Currency Mortgage

If you’re an expat, foreign national or simply have overseas income streams while living in the UK, obtaining a foreign income mortgage is absolutely possible.

While you can go it alone, it can be very difficult to compare and contrast options when it comes to foreign currency mortgages.

Why?

Because you can’t easily compare products with comparison sites – the products are too specific and niche. You’d have to apply and speak with every lender in the market – of which there are a large number, and many are difficult to find through search engines. This is incredibly time-consuming, and you’re quite frankly unlikely to find the best deal on the market.

A specialist mortgage broker is the most common route for borrowers with complex income structures – we can take your application to many lenders efficiently, negotiate terms on your behalf, and take all the hassle out of your application for you.

Currencies Acceptable to UK Mortgage Lenders

When it comes to getting a UK mortgage with foreign currency income, it’s important to know which currencies are acceptable to lenders.

The good news is that many UK mortgage lenders are open to accepting income from a variety of foreign currencies. This provides flexibility for individuals earning in currencies such as Chinese Yuan, Saudi Riyals, UAE Dirham, and Hong Kong Dollar, among many others.

Generally speaking, if you’re earning in the currency of any of these countries, we should be able to help you secure a mortgage.

What happens to my mortgage if we change currency?

If you have an existing mortgage and the currency you’re earning in change, you’ll need to let your mortgage lender know as soon as possible. As long as you can still make your repayments, it shouldn’t be an issue at all. However, if you’re remortgaging – for example when your deal has come to an end – you may well need to change mortgage lenders for an improved rate.

If your current mortgage lender is unfamiliar with the currency you’re now earning in, they may offer you poor terms. At the very least, it’s worth speaking to a specialist in foreign currency mortgages like ourselves to get an understanding of your options.

Can I get a Euro Mortgage in the UK?

Yes, you can get a UK mortgage if you earn in Euros. We recommend speaking to a specialist mortgage broker who is familiar with Euro and other foreign currency mortgages in the UK, like ourselves.

How UK Expat Mortgage Can Help

If you are an expat or a non-UK resident with foreign currency income, navigating the complexities of the mortgage process can be challenging. That’s where UK Expat Mortgage comes in. Our team of experts specialises in assisting individuals like you, providing personalised advice and guidance to help you find suitable mortgage options.

At UK Expat Mortgage, we understand the unique needs and challenges faced by those with foreign currency income. We work closely with a network of mortgage lenders who are willing to consider applicants with a foreign income, ensuring that you have access to the best financial solutions.

Our experienced team will guide you through the entire process, from assessing your eligibility to securing the most favourable terms for your mortgage. Whether you are living and working abroad or planning to invest in the UK property market, we can help you find the right mortgage solution tailored to your circumstances.

Contact UK Expat Mortgage today to arrange a free consultation and explore the possibilities for your expat mortgage.