Acquiring an expat mortgage in the UK can take time and much effort, as the chances of getting one are not always highly favourable to borrowers. However, with proper planning and strategy to improve your eligibility before you apply, applications for expat mortgages UK can yield great results.
An expat mortgage is a mortgage designed for expatriates who work and live outside their country and want to buy property back home. Unfortunately, most mainstream / High Street lenders regard ex-pat borrowers as high-risk as they earn in foreign currency, their income tends to fluctuate and they’re based abroad.
Luckily, there are several things you can do to overcome these challenges and boost your chances of approval:
Learn the Basics of Expat Mortgages & the Common Challenges Expats Face
The most important thing you need to know before applying for an expat mortgage is what it entails and how fundamentally different it is from a normal UK mortgage.
Common challenges expats face include strict eligibility requirements. These typically require high upfront deposits, usually ranging from 25% to 40% of the property’s value. These mortgage products are created for non-resident citizens who want to buy property in the UK without changing their citizenship status.
Improve Your Financial Profile
The assessment should take into account your entire financial situation, how stable it is and your capacity to repay. If you’re wondering what will help your chances of getting an expat mortgage the most, read on.
● Stable Income
Lenders seek proof of a stable income. This can come in the form of contracts, payslips and tax returns. Self-employed applicants should provide at least two years of audited accounts. Most lenders prefer borrowers to receive income in strong currencies like USD, EUR or GBP. However, a currency exchange specialist can help mitigate risks when less stable currencies are involved.
● Increase Deposit Keeping Savings
The lower the lender’s exposure to risk, the greater the chance of approval. High risk can also mean paying a larger deposit. These mortgages typically require an expat deposit of 25 – 40 % of the property’s total value. This means you may need to save budget to save in advance and whilst paying down any debts you already have.
● Keep a Clean Credit History
The importance of a strong UK credit history should not never be underestimated. Whatever your debts, pay them regularly, on-time and avoid defaults. If you’ve been living outside of the UK for a long time, the best way to reinvent your poor credit and improve your credit score is to open a bank account and get a credit card that will help you build up your rating and eligibility for finance.
● Lower Your Debt-to-Income Ratio
Lenders prefer borrowers with fewer financial commitments. To show lenders that you have good financial management skills, you can lower your debt-to-income ratio by clearing any outstanding loans and credit card balances.
Have All Your Documents Ready To Go
Once you’ve taken the above steps, you can prepare your essential documents before you apply to receive a faster service and optimise your chances of success. This paperwork usually includes proof of identity (passport, visa, or residency permit), proof of address (utility bills and rental agreements) and proof of income (payslips, contracts, tax returns plus bank statements for UK and overseas transactions).
You can also provide credit reports from the UK or overseas credit reference agencies plus details about the property you want to buy. Make sure all the documents are up-to-date and a true reflection your current financial situation.
Engage an Expert Expat Mortgage Broker UK
The expat mortgage market can seem restrictive and not all lenders offer these loans. However, a specialist broker can help identify lenders most likely to approve your expat mortgages UK application, negotiate better terms and guide you through the process to avoid common mistakes. Also choose an FCA regulated and authorised broker for the highest standards of professionalism and reliability – these provide you with peace-of-mind and recourse in the event that anything goes wrong.
Choose the Right Property
The type and location of the property you want to buy will be relevant to the chances of your mortgage application being approved. For instance, lenders might put restrictions on high-rise apartments or buy-to-let properties, whereas more desirable property locations can give you a higher chance of approval. Before you make an offer, ensure that property valuation is carried out professionally and accurate to prevent problems with your loan-to-value ratio (LTV).
Be Aware of Currency Exchange Risks
Every mortgage repayment can be affected by fluctuations in income in a foreign currency. Consider using a currency exchange specialist or hedging the income repayment to avoid problems. Although some lenders may allow income conversion to GBP into a UK account, a good action plan will demonstrate financial responsibility and therefore improve your approval chances for UK expat mortgages.
Enhance Your Residency Standing
Although it is possible to secure an expat mortgage without it, residency status will certainly help. If you’re a UK citizen, permanent resident or someone who’s likely to return to the UK at some stage, this can make your application less risky to a lender. Ensure your visa or residency permit enables you to remain in your current country if you are a non-UK citizen.
Consider the Future
Lenders prefer to see a long-term repayment strategy when it comes to property. Whatever your plans are, whether you’re likely to sell your future home at some time in the future or let it out to tenants, you’re more likely to be approved if you have a clearly defined, strong and convincing plan.
Do not apply for a mortgage if you intend on selling it shortly after you buy, as it will raise red flags for the lenders.
Timing Is Everything
Timing anything can work to your advantage when it comes to getting your application approved. If you’ve just received a bonus or salary increase, this can be a great time to put your application in.
It’s rarely wise to apply for a mortgage during economically turbulent times or times of high currency volatility, as lenders are very unlikely to approve you in these situations. A good way to gauge when to apply is after researching the current market conditions and interest trends. If market conditions seem particularly turbulent, it may be best to delay your application until the time is right.
Conclusion
Being approved for expat mortgages UK requires a strong blend of planning, preparation and understanding lender requirements. Working on your financial profile, getting an expert broker and gathering all your relevant documents together can greatly improve the chance of getting accepted.
Although expats do need to work hard for approval, determination and preparation can be the difference between approval and rejection. For expert guidance and tailored mortgage solutions, visit Expat Mortgage UK.
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