It is not hard to buy a house in the UK, but the process is complicated, especially if you live abroad as a British expat. Your residency status is one of the most important factors that will decide if you can secure a UK mortgage.
When looking at expat residential mortgages UK for your application, mortgage lenders will review all the information and finer details in order to decide whether or not to approve your mortgage.
Knowing how your residency status affects your eligibility enables you to plan ahead accordingly, avoid delays and increase your approval likelihood.
Why Residency Status Matters
When UK mortgage lenders approve loans, they firstly consider the risk. The overall risk is comprised of multiple factors, one of which is based upon where you live. If you live in the UK, have permanent residency and a job there, then things are much more straightforward.
However, if you are an expat or a non-resident in the UK, the mortgage process will be more complex for you. Lenders might want more paperwork, a bigger deposit and a higher interest rate is applied. This is because it is harder to figure out how much money someone makes when they live abroad, potentially earn income there and therefore be deemed overall a higher lending risk.
Types of Residency Status and Their Impact
The type of residency status you have has a big impact on what you can borrow and how expat mortgage lenders look at your application.
- UK residents with permanent residency: you will be treated like a UK citizen if you live in the UK and have permanent residency. In order to secure a regular mortgage, all you need is a normal deposit and to pass a credit check.
- Visa holders: if you are a skilled worker or have a Health and Care Visa and have lived in the UK for at least a year, it is easier to get a mortgage. Depending on the individual lender, you might need to reside in the UK a little longer to secure a mortgage.
- Expats and non-residents: if you live outside of the UK and want to buy a property in the UK, you will need to put down a big deposit, which can be between 20% and 40%. You will also need to show proof of your income and have a good credit history. This makes things harder, but with the right planning and support, it can certainly be achieved.
What Expat Mortgage Lenders Need to See
When you apply for a UK expat mortgage, lenders will carefully look at a number of things:
- Proof of income: you should be ready to provide pay slips, tax returns, or contracts. If your income is paid in a different currency, lenders might lower the amount a little to protect themselves against exchange rate risks.
- Deposit size: if you put down a bigger deposit, you might be able to get a lower interest rate on your loan. Lenders will usually let foreign nationals borrow money for 75% to 80% of the value of the property.
- Credit history: having a credit history in the UK can make a big difference. If you live outside the UK but keep a UK bank account or credit card, it gives lenders a good credit footprint to review and therefore lowers their risk.
Average Interest Rates and Costs
British expatriates pay a little more in interest on their mortgages than UK residents. Most of the time, interest rates start at around 4.5% to 5%. The amount you earn, where you live, and the size of your deposit can all influence the interest rate you will be offered.
If you put down more in terms of a deposit, then you are likely to secure a better rate. It might not seem like a big deal when you compare it to resident mortgages, but it can add up over the life of the loan, so you should think carefully about your options. This is why it is so important to always seek the advice and support of a professional expat mortgage broker.
Using an Expat Mortgage Calculator
From the start, you need to plan well. You can use the expat mortgage calculator to:
- Calculate how much money you need for the loan.
- Calculate how much you need to put down as a deposit.
- Calculate how much you will have to pay back each month based on your income and the interest rates.
5 Steps to Improve Your Approval Likelihood
- Check your visa status and see how long you have been in the UK.
- You will need to show proof of your income and savings, so keep it handy.
- Keep a UK bank account or credit card open to build your credit history.
- Check to see if you can afford it with a down payment and loan calculator.
- Look for a mortgage broker who knows about UK home loans for expats. Our UK expat mortgage application guide covers exactly how lenders assess unclear residency and what a strong application looks like.
Final Thoughts
If you are a UK resident, securing a mortgage is much less complicated and more straightforward if you live in the UK permanently or are a UK citizen. But if you do not live in the UK, you will have to follow stricter criteria, provide a lot of paperwork, need a bigger deposit and also possibly pay a higher interest rate.
Most crucially however, it is most certainly achievable and very commonplace to secure an expat mortgage in the UK if you plan ahead, keep good records and get the right help, support and guidance from a mortgage professional.
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
- Common Challenges Expats Face When Applying for a UK Mortgage – the eligibility hurdles that come up most often and how to prepare for them.
- Returning to UK Mid-Term? What Happens to Your Expat Mortgage – how your mortgage and tax position change if your residency status shifts back to the UK.
- Foreign Investment in the UK Guide – what overseas buyers need to know before investing in UK property.
- Expat Locations – country-by-country guidance on how UK lenders treat applications based on where you live.
- Can Expats Get a UK Mortgage? – eligibility criteria, lender selection and what the specialist market looks for.