Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in and we’ll get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at [email protected].
Question: I’m currently working in Australia, but my home base is in London. I’m interested in buying a property in the UK and have saved a deposit of £40,000. Am I still eligible for a UK mortgage even though I’m working abroad?
Answer: Buying a property in the UK while living and working abroad can seem like a daunting task, but it’s entirely possible with the right preparation. Many UK nationals, or even foreign residents with ties to the UK, look to invest in property, either for personal use, rental income, or as part of a long-term investment strategy. Although there are a few more challenges compared to applying from within the UK, you can still successfully secure a mortgage from overseas.
One of the key challenges is that UK lenders often have specific criteria for expatriates or those working abroad. This can include minimum income levels, proof of employment, and, in some cases, a particular residency status.
Lenders generally want to ensure that you have a stable, reliable income and that your residency or visa status does not pose any risk to them. It’s crucial to research and find lenders who are open to working with expatriates, as not all lenders will be willing to do so. Some banks even have specialist expatriate mortgage departments to cater to people in your situation.
Your deposit of £40,000 is a significant advantage. A larger deposit can not only improve your chances of approval but may also help you secure better terms, such as a lower interest rate.
This is particularly important for overseas applicants, as lenders often see expats as a higher risk due to factors like fluctuating income or the difficulty in verifying overseas employment. A larger deposit reduces their risk, making your application more attractive. In general, the more you can put down, the better the terms you’re likely to receive.
Lenders will also carefully assess your financial situation, considering your employment status, income, and any financial commitments. You’ll need to provide documentation such as payslips, tax returns, or even letters from your employer confirming your salary and contract status. One challenge for expats is the currency of your income—if you’re earning in a currency other than GBP, lenders will factor exchange rate fluctuations into their assessment of affordability. If the pound strengthens or weakens significantly, it could affect how affordable your repayments are, which is why lenders scrutinise overseas incomes closely.
Your credit score is another major consideration. UK lenders will check your credit history to assess whether you have a good track record of managing your finances. Maintaining a strong credit score in the UK is essential, even if you’ve been living abroad for several years. Make sure your credit report is in good shape before applying, as this will be key to getting approval. It’s also a good idea to check if you have any old or dormant accounts in the UK that could affect your credit score. Sometimes, simply closing unused accounts can improve your credit profile.
Working with a mortgage broker who specialises in expatriate mortgages can be extremely beneficial. A broker can help you navigate the complexities of applying for a mortgage from abroad, find the right lender, and ensure your unique circumstances are considered. Brokers often have access to deals that aren’t available directly to customers and can save you time by identifying which lenders are most likely to approve your application.
While many major UK lenders can be cautious about offering mortgages to expats, often with stricter requirements, there are lenders who specialise in this type of mortgage. Some of these lenders also understand the unique challenges expatriates face, such as time zone differences or the need for flexibility in communication. With the right guidance, securing a UK mortgage from overseas is more common than you might think.
It’s also worth noting that the process may take a little longer than it would for a UK-based applicant. There may be additional checks, more paperwork, or delays in verifying overseas income and employment. However, with careful planning and the right preparation, these obstacles can be overcome.
In short, while securing a UK mortgage from abroad may take extra effort, it’s far from impossible. With the right paperwork in hand, a strong deposit, and expert guidance, you’ll be on your way to owning a UK property, no matter where you work. Whether you’re investing in a future home, building a rental portfolio, or simply wanting to maintain ties to the UK, getting a mortgage as an expatriate is achievable with the right approach.
