What is an Expat Mortgage?
An expatriate (often shortened to expat) is a person either temporarily or permanently residing in a country other than that of their citizenship. In common usage the term generally refers to skilled workers or professionals sent abroad by their employers to work – these can be companies, governments or non governmental organisations.
The difficulty of this type of work from a mortgage point of view is that someone working outside the UK will generally not be a UK tax payer – which is a requirement for normal mortgage underwriting.
Even clients who are living abroad but still working for a UK company and paid in Sterling can still be classed as an expat for mortgage purposes – this will apply if you reside outside of the UK for more than 6 months of the year and are not subject to UK tax laws.
The 3 basic types of expat mortgage scenario we come across are:
- Homeowners who are planning to move abroad and wish to retain their property – usually to rent this out to tenants.
- Homeowners who are living abroad and have the property already rented out but wish to remortgage.
- People who are currently living abroad and planning to return home – and are buying a property to live in at some point in the future.
Why are Expat mortgages specialist?
These types of mortgage are not necessarily more complex but they are more complicated – from the initial fact-find through to processing the application to offer, they need more care and more expertise.
As a broker we ask a lot more questions to determine the viability of the application, and we have a lot less choice in terms of lender also.
It can also cause issues and delays with regards to AML requirements and obtaining a clients proof of residence and proof of identity. Mint FS use electronic ID verification via Smart Search to speed up our applications.
Why is it harder to get a mortgage as an expat?
There are various reasons why mortgage lenders will be, on the whole, more reluctant to lend to expats. These reasons are centred around the difficulty in following procedures that guarantee the borrower’s financial stability when they have been living abroad for a potentially very long time.
If a mortgage provider sees a certain kind of customer as higher risk then they will either refuse them a loan altogether, or offer higher interest to offset said risk.
But while, as an expat, you might find it harder to get a mortgage and might pay a little more when you do, this doesn’t mean you have to break the bank.
Some of the things which can effect an Expat Mortgage application are?
- How long the client has been living outside the UK
- What currency their income is paid in
- What country they are working in and the country that their companies head office is based in
- How can they evidence their earnings?
- What are their plans for the next 5 years?
Are there any differences to the process?
Essentially the main difference is the detail required and the time – an expat application will normally take up to 50% longer to complete than a normal residential application.
This is in part due to the parties being in different countries – but also due to the more in depth fact finding required and the bespoke nature of the underwriting from lenders.
There are around 30 lenders who will consider an expat mortgage scenario – in the majority of cases these are either building societies or specialist lenders. A lot have more manual application processes and longer processing times to offer.
It is therefore even more important with these types of applications to seek out the advice of an expert. Mint FS works with these smaller banks and building societies to ensure our cases progress to a successful offer.
We successfully arrange mortgages for UK expats living abroad and offer both homeowner loans to either purchase or re-mortgage houses or flats. We can also organise finance on residential properties and mortgages for investment purchases, through our Buy To Let lenders.
Mint FS are experts in mortgage advice for expats – call us today on 0330 1355914 for an initial conversation or complete our contact form and one of our advisers will call you back.