Why now could be a great time to get an expat mortgage in the UK

17th September 2019

prime central London housing

If you’re looking to buy a home in the UK with a mortgage from overseas, now could be a smart time.

The pound has been weaker against other currencies since the Brexit vote in 2016, which means you can get more for your money if your salary is in a foreign currency.

In London, prices have fallen by 4.4% in the year to May 2019, Office for National Statistics data shows. (1)

In prime central London - traditionally a hotspot for wealthier expats - prices have dropped considerably since stamp duty was overhauled in 2014.

Because of these developments, expat activity is said to be strong, particularly from the USA (2) and the United Arab Emirates (3).

Two types of expat mortgages

There are generally two types of expat mortgage, depending on what you want to do with your home.

You can take out a mortgage for you or someone else, like a family member, to live in the home.

Or you can take out a buy-to-let mortgage if you want to rent it out.

Expat mortgage lenders

Lenders that are prominently involved in expatriate mortgages include Skipton International, Marsden Building Society, and NatWest International.

For high-net-worth borrowers, private banks like Investec are also in the market.

Not that lenders only cater for the rich. Smaller building societies like Mansfield, Cambridge, and Tipton also offer expat mortgages.

Tipton does a lot of buy-to-let at the cheaper end for expats buying outside of London.

The downside of building societies being heavily involved in the market is that there are more options for buying in England and Wales than in Scotland, where fewer societies lend.

Lender restrictions

If you’re based abroad, lenders are typically more cautious about lending to you, which could explain why some high street lenders don’t offer expat mortgages.

The lenders that are in the market are typically more careful about things like fraud, as it’s often harder to ascertain the borrower’s credit history.

Lenders also have different rules depending on where you live - some countries are considered riskier than others.

Currency impact on the amount you could borrow

Another big issue is currency.

If you’re buying in sterling, but your salary is in a different currency, lenders typically stress test against the currency losing 20% of its value.

So if you earn €100,000 they’ll accept 80% of your salary when deciding how much you can afford to repay.

This could reduce the size of the mortgage you can get.

Is an expat mortgage right for you?

“Before taking the plunge we’d recommend speaking to a specialist adviser or broker to discuss what’s the best move for you,” said Sam Amidi, a Trussle Mortgage Adviser.

“If you plan to move back to the UK, one option is to wait until you arrive, as you’d have more lenders to choose from.

“However, living abroad needn’t shut you out of buying UK property with a mortgage, as there are numerous lenders willing to help you buy in the right circumstances.”

Sources:

(1) Office for National Statistics

(2) Telegraph

(3) emigrate.co.uk

Share this page on: Twitter Facebook

Get the right mortgage for you

And save up to £344 per month

Individual savings may vary depending on personal circumstances.