Navigating the world of mortgages as an expat can be challenging, whether you’re returning to the UK or looking to invest in UK property from abroad.

This guide will walk you through your options, potential challenges, and strategies to secure the best mortgage for your situation.

If You’re Returning to the UK

When returning to the UK after living abroad, you’ll generally have two main paths to explore:

1. Standard UK mortgage
2. Specialised expat mortgage product

Standard UK Mortgages

These mortgages typically offer the best interest rates and most favorable terms.

You’ll find them advertised by high street banks like Santander, and the main advantage of these products is their competitive rates and terms.

However, they come with a significant caveat: they usually require a solid UK credit history, which you may not have if you’ve been living overseas for an extended period.

Expat Mortgages

If you don’t have a strong UK credit history (we’ll cover the best way to build your credit history quickly next), expat mortgages become a viable alternative.

Here’s what you need to know:

• Interest rates: Typically 0.75-1% higher than standard UK mortgages
• Terms: May be less competitive when it comes to perks like free valuations (typically £999) and reduced lender fees
• Flexibility: Many returning expats choose to take out a 2-year deal and then remortgage to a UK resident mortgage at the end of the term

Despite the slightly higher costs, expat mortgages remain a popular and viable option for many returning expats to get their foot back on the UK property ladder.

Building Your UK Credit Profile

If you’re aiming for a standard UK mortgage, establishing or re-establishing your UK credit history is key.

At UK Expat Mortgage, we can advise on the best approach for you and roughly how long it may take, but here are some generally effective strategies across the board:

1. Register to Vote: Use a family member’s address (with their permission) to quickly start building credit.
2. Open a UK Bank Account: Once on the electoral roll, use this to apply for a UK bank account. Ensure it’s an account that reports to UK credit rating agencies like Experian. If you can get yourself added to a utility bill at the property too at this stage, this can also help.
3. Create a Credit Report: Start building an Experian credit report to potentially become eligible for a UK mortgage.

Alternatively, you could consider renting and applying this same strategy, but with most rental contracts lasting a minimum of 12 months (or 6 months at best), this is a longer-term approach to UK property ownership.

If You’re Purchasing a Buy-to-Let Property from Abroad

Getting a buy-to-let mortgage in the UK as an expat has its challenges, but it’s far from impossible.

There are specialised lenders who offer mortgages specifically for expats looking to invest in UK property.

Key Features of Expat Buy-to-Let Mortgages:

• No UK residency required
• Ability to earn in a foreign currency
• No need for a UK credit score (although it helps)
• Top slicing personal income is an option
• Borrowing up to 75% loan-to-value (varies by lender and circumstances)
• Borrowing capacity typically 3.5 to 6 times your income

These mortgages are designed to accommodate the unique circumstances of expats, including overseas residency, earnings in foreign currency, and lack of UK credit history.

Interest-Only Option

Consider exploring interest-only expat mortgages. These can provide more flexibility for your cash flow while you’re working overseas and are generally popular among expats, especially those earning large annual bonuses, for example.

If You’re Buying a UK Residential Property but Staying Abroad

Many expats face rejection when approaching high street banks for mortgages while living abroad.

This is because most of these banks aren’t set up for expat mortgages – they lack specialist underwriters and focus on generic UK mortgages.

Remember: A mortgage advisor from a high street bank can only advise on that bank’s own products. If they can’t offer an expat mortgage, they might tell you it’s not possible, when in fact it is through other lenders.

This is where specialist expat mortgage brokers come in. We have connections with:

• High street banks
• International building societies
• Specialist expat lenders
• Private banks

These connections allow us to facilitate a wide range of expat mortgage solutions. We can compare rates across the market to ensure you’re getting the best deal possible for your situation.

How Much Expat Mortgages Cost (Rates and Fees)

Expat mortgage rates in the UK are generally slightly higher than standard mortgage rates due to:

• Added complexity
• Perceived higher risk
• Challenges like earning income in a foreign currency
• Language barriers
• Unfamiliar legal and financial systems
• Limited UK credit history

However, specialist lenders and international building societies that cater to the expat market may offer more competitive rates.

Best Rates

High street banks often offer the best expat mortgage rates, but only a small number accept expat mortgages, and their lending criteria are typically the most strict. We do our best to fit our clients’ applications into high street lending criteria if the rate saving is significant, but if this isn’t possible a competitive solution from a building society or specialist lender is still affordable.

Additional Costs

Be prepared for potentially higher costs in terms of:

• Deposit requirements
• Broker fees
• Lender fees
• Property valuation fees (often not waived for expat products as they might be for standard UK mortgages)

How Long the Process Takes

The expat mortgage process generally takes about the same time as a standard mortgage, sometimes slightly longer due to:

• Need for lenders to liaise with international employers
• Communication across different time zones
• Additional verification steps

A good expat mortgage broker with an understanding of the international landscape can help speed up this process.

What Deposit You’ll Need

You generally need a 20% deposit for a residential expat mortgage.

Some lenders are willing to go higher than this for some applicants depending on your income and situation, while others won’t.

For buy to let expat mortgages, you generally need a 25% deposit.

Again, some lenders can go above this threshold in some cases, and others will cut lending off below this – it depends on the lender and your specific application.

To understand exactly how much you can borrow, how much deposit you’ll need and how much it could cost you in terms of rates and fees, book a free call with an advisor and we can walk you through the details.

For help with the process and to get a clear picture of your borrowing potential, speak to us today.

How Much You Can Borrow

You can generally borrow from 3 to 5.5 times your salary with a residential expat mortgage, provided you have the necessary deposit to facilitate the loan size.

Note that if you’re not earning in GBP, your income will be docked roughly 15% to account for currency fluctuations.

Use our expat mortgage calculator for a rough idea.

Buy to let expat mortgages are based on the projected rental income of the portfolio and stress testing by the lender, so this is a separate calculation.

Why Use an Expat Mortgage Broker

Working with a specialist expat mortgage broker can significantly improve your chances of securing a loan with favorable terms and rates. Here’s why:

1. Market Comparison: We can compare rates across the market and provide independent advice.
2. Tailored Solutions: A good broker will clearly outline your best funding options to ensure you’re making the right decision for your situation.
3. Potential Savings: Their expertise can often save you thousands of pounds in interest and fees, depending on your loan size and circumstances.
4. Application Support: Perhaps most importantly, they provide end-to-end support for your application. This includes:
   • Dealing with lenders, solicitors, surveyors, employers, and more
   • Ensuring your application gets prioritised and chased through
   • Handling all the paperwork to make the process less stressful for you