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The UK mortgage market - What expats should know

As the UK housing market adjusts to a new post pandemic and Stamp Duty Holiday “normal”, a so-called “mortgage boom” hasn’t shown signs of slowing down, even with expected rising interest rates on the way.

While the shifting sands of the market can prove hard to navigate without professional guidance, things can be even more complicated for UK expats (both returning and staying abroad) as they try to understand the best mortgage decisions for their needs. We’ve compiled a list of FAQs and answers below to summarise some common expat concerns.

Expats heading back to the UK, will this affect their mortgage rates?

A common concern for expats returning to the United Kingdom, there are some aspects of having lived abroad that could impact their application and mortgage rates.

While it’s true that some lenders may only engage with applicants who have had a UK address in the past three years, and/ or have a UK credit history from recent years, that doesn’t mean it’s impossible to secure a loan if you’ve been out of the country. Every application is considered by the lender on a case-by-case basis and with the assistance of a specialist advisor like those in the Tailor My Property network, there are some helpful tips that could help you succeed.

For example, expats who are able to maintain a UK correspondence address could have a higher chance of succeeding with a loan, as do those who are able to put down a larger deposit. Where possible, applicants who are able to deposit around 25% or higher of the value of the property have a better chance of succeeding in their application. It also doesn’t hurt to maintain a UK credit score while abroad, this can be as easy as using an international credit card with a UK bank while you’re living in another country. Lastly, proof of stable employment, your chances will be improved.

Mortgage opportunities for expats remaining offshore

People living outside of the UK may find it difficult to secure a UK property loan as lenders restrict their borrowing requirements in the aftermath of Brexit and the Covid-19 pandemic.

The amount anybody can borrow for a UK mortgage, whether they live in the UK or abroad, will primarily depend on two factors - the size of the deposit they can put down and their total provable income. The actual amount of the loan depends on other factors such as the applicant’s employment history and current job security, their existing debts and previous failed or successful applications. (In the case of a buy-to-let mortgage, i.e. a rental property, the expected income from the rent will also be taken into account when determining the maximum mortgage value).

Again, an application is more likely to succeed if the expat applicant can provide proof of earnings and stable employment and a UK credit history (where possible). As always, guidance from a professional will help you navigate the process and can help you get past potential challenges, including:

The applicant’s main source of income coming from another country, a lack of UK credit history, a past of moving around from job to job and country to country, a more “at risk” age (if you plan to retire in 15 years or less).

Those outside of the UK looking to obtain a mortgage do not have to consider buy-to-let as their only option. People living in Singapore looking to obtain a mortgage in the UK can obtain the mortgage for a property they're purchasing with the intention to use personally. In fact, now would be the ideal time with rates as low as 1.25% fixed for two years if they can put down 25%.

Remortgage opportunities for returning expats

Whether you want to maintain an existing property in the UK for your own use, to use as a buy-to-let property or just to keep a property presence in the UK, expat remortgages on properties can be easier to arrange than new mortgages because you will usually have an up-to-date credit history and existing UK property presence.

With Savills predicting that house prices will grow by 3.5% in 2022 and interest rates expected to rise, now might be the ideal time to remortgage your property. That said, there are some other specific expat mortgage criteria you will need to comply with, (e.g. a minimum income equivalent to £25,000, regular employment, references, payslips and some proof of UK based equity). The best way to ensure you’re compliant and your application will succeed is to work alongside a professional who can offer expert advice.

Tailor My Property’s experienced network of advisors and brokers can assist you every step of the way. Get in touch today to find out what your next step should be.


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