It’s 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 a permanent residency and a job there, then things are much more straightforward.
However, if you’re 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’s harder to figure out how much money someone makes when they live abroad, potentially earn income there and therefore overall deemed to be 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 just 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’ll 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 the lenders a good credit footprint to review and therefore lower 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 of money 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’re 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 is it 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’ve 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.
- You might want to look for a mortgage broker who knows about UK home loans for expats.
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 don’t live in the UK, you’ll have to follow stricter criteria, provide a lot of paperwork, need a bigger deposit and also possibly pay higher interest rate.
Most crucially however, it is most certainly achievable and very commonplace to secure an Expat mortgage UK if you plan ahead, keep good records and get the right help, support and guidance from a mortgage professional.
Need Help Securing Your UK Expat Mortgage?
Our mortgage experts guide UK expats on mortgage eligibility, deposits and interest rates so get in touch today – Contact us for personalised support and a smooth mortgage approval.