Client
A UK-born expat who lives in Canada and has a residential property in the UK that she has rented out since leaving the country in 2016. She moved first to Singapore and then on to Canada. The property is currently on shared ownership, and she wished to purchase up to 75% and remove the shared ownership aspect entirely.
Background
The client has a good income and an established job, but does have some adverse credit, including missed mortgage payments – one just over a year ago and two others within the last three years. Initially she wanted an expat capital and interest mortgage, but once we established her full circumstances there were several factors to consider: the adverse credit, the fact that no other property is owned, and that she used to live in the subject property herself.
Requirement
- Remortgage a rented-out UK property away from shared ownership
- Staircase up to a 75% share and remove the shared ownership aspect entirely
- Work with a lender comfortable with adverse credit, including recent missed mortgage payments
- Secure a five-year fixed rate that worked for rental affordability
Challenges
Several issues stacked up against the case. Most lenders regarded as more specialist in the expat sphere do not offer capital and interest, and some lenders simply do not allow a remortgage for expats away from shared ownership. Combined with the adverse credit, the absence of any other owned property, and the fact the client had previously lived in the property herself, the number of lenders willing to consider the case was very limited.
Solution
A five-year fixed expat mortgage was always going to be the only option in terms of rental affordability. However, once we checked the case with the mainstream lenders, the combination of issues meant it did not fit with any of them. We then found a specialist lender comfortable with what many regard as “consumer lending”. They had criteria on missed mortgage payments, but only within the last year, and were also fine with the shared ownership aspect and offered capital and interest mortgages.
With the benefit of our specialist advice, the client was able to make an informed decision. She was keen on capital and interest, but this left her very close to the coverage required given the rental income received – and, as she was also paying management fees, it did not fit with the lender overall on that basis. We therefore suggested an expat interest only mortgage. While the lender does not allow intermittent overpayments, it does allow the client to repay the loan in full within the five-year fixed period without any early redemption charges (ERCs).
Outcome
The client secured a five-year fixed expat interest only mortgage, removing the shared ownership aspect entirely. As long as she keeps her credit clean, in a couple of years she should be able to remortgage to a better lender, switch to a capital and interest mortgage, pay less overall, and avoid any exorbitant early redemption charges. The client was delighted, as the solution ultimately ticked all her boxes. For an idea of what you could borrow in a similar scenario, our expat mortgage calculator gives an instant estimate.
Summary
Adverse credit, shared ownership, and a preference for a specific repayment type can each narrow the expat lender pool on their own, and stacked together they call for genuinely specialist advice. Sometimes the best long-term outcome is a stepping-stone product now that keeps the door open to a better one later – browse our other expat mortgage case studies for similar examples.
Key Point
Key factors to consider for expat mortgages:
- Not all expat lenders offer capital and interest.
- Adverse credit makes mortgages for British expats specialist lending, with somewhat limited options.
- Many expat lenders consider whether you have ever lived in the UK and whether you own any other UK properties.
- Remortgaging away from shared ownership is not widely available.
Frequently Asked Questions
Can I remortgage away from shared ownership as an expat?
Yes, but it’s not widely available.
Only some expat lenders allow a remortgage that staircases up and removes the shared ownership aspect, so the pool is narrow.
Can I get an expat mortgage with adverse credit and missed mortgage payments?
Yes, with a specialist lender.
Some lenders assess recent missed payments only within the last year, which can make an otherwise difficult case placeable.
What's the difference between interest only and capital and interest for expats?
Interest only keeps monthly payments lower, which can help with rental affordability.
Capital and interest repays the balance over time but requires stronger coverage, which isn’t always available where rental income is tight.
Can I repay an expat interest only mortgage early without penalties?
Sometimes, depending on the lender’s terms.
In this case the lender allowed full repayment within the five-year fixed period with no early redemption charges, even though intermittent overpayments weren’t permitted.
If you have any questions relating to an expat remortgage, contact us today to speak directly with one of our CeMAP certified Mortgage Advisors.
Expat Mortgages UK is a specialist broker directly authorised and regulated by the Financial Conduct Authority. We work exclusively with expats and foreign nationals buying UK property with overseas income. Your home may be repossessed if you do not keep up repayments on your mortgage.
Call: +44 1494 622 555 Email: info@expatmortgages-uk.com
Related Pages
- UK mortgages for expats in Canada – How lenders assess applications from expats based in Canada.
- expat remortgages – Switching your UK property onto the right expat product.
- expat mortgage application guide – The documents, timeline, and steps involved in getting an expat mortgage approved.
- expat mortgage income requirements – The income evidence expat lenders typically expect.
- expat mortgage case studies – Real examples of expat and foreign national UK mortgage completions.