Buying a house in the UK whilst living in the US can be challenging, particularly when it comes to acquiring a mortgage. One of the biggest issues you could face is your credit score. UK lenders look at your domestic credit history when deciding whether to approve a mortgage, but they don’t consider US credit scores.
If you have been a resident of the US for a long time, you may not have an active credit record in the UK, and this can make it harder to be accepted. Even if you do have a stable income and a substantial amount of savings, you may be still considered as high-risk by lenders.
However, with the right approach, you can improve your chances of obtaining a mortgage in the UK. To find out more about getting a UK Mortgage for Expats in the US, read on.
How Do Credit Scores Work in the UK?
A credit score is a number that tells you how reliable you are as a borrower. UK lenders will use this score to decide whether to approve your mortgage application.
- Credit Reference Agencies (CRAs): There are three major CRAs in the UK – Experian, Equifax and TransUnion. They each collect your financial data use it to determine a score. Your score can vary from one agency to another.
- Score Range: A different score range is used by each of these CRAs. However, a score more than 700 is generally considered to be good and should help secure approval for your mortgage.
What Affects Your Credit Score?
Your credit history, loans, payment of bills and past debt all contribute to your credit score.
Bad credit or not having a credit rating at all can make it difficult to get a mortgage in the UK.
Why Living in America Affects Your UK Credit Rating
When you move to the US, your UK credit rating doesn’t head across the Atlantic with you. This can cause a number of issues when you’re trying to get a UK Mortgage as an Expat Living in the USA.
Here are some of the things that can stop you getting a UK mortgage in the US.
- No Active UK Credit History: If you haven’t used a UK bank account, credit card or loan for a long time, your credit record may disappear.
- Unknown US Credit Scores: UK mortgage lenders have no access to your US credit score. Even if you’ve been a model citizen in the US and always made credit repayments on time, this won’t help your UK credit score.
- Address History Issues: UK lenders will almost always check your UK address history. If you’ve been in the US for several years, you might not have a recent UK address on your file. This can make it harder to demonstrate stability.
Challenges of Obtaining a UK Mortgage in the US
Obtaining expat mortgages UK in the US is rarely easy. Some of the major issues you may face include:
- Shortage of UK Credit Activity: Without a recent UK financial history, your credit file is likely to be empty.
- Limited Choice of Lenders: Most UK mortgage lenders prioritise UK job-holders and income earners with great UK credit records.
- Higher Deposit Amounts: Some lenders may ask for a higher deposit (20-40%) to reduce their level of risk.
- Tighter Income Verifications: If you earn your salary in US dollars, lenders may have stricter guidelines on how they verify your income. Exchange rates can also affect affordability calculations.
Ways to Increase Your Chances of Obtaining a UK Mortgage
Despite all these obstacles, it’s still possible to boost your chances of getting a UK mortgage while you’re in the US.
1. Maintain an Active UK Bank Account
If possible, maintain an open UK bank account and use it on a regular basis. Money deposits, transactions and bill payments will all keep your account active.
2. Use a UK Credit Card
You can also use a UK credit card to make small purchases and build your credit history. Make repayments on time, every time in order to maintain a good credit rating.
3. Register on the Electoral Roll
Getting yourself registered on the UK electoral roll is very helpful as it means lenders can directly identify and verify both your address and identity. If you do have a UK address, register yourself there if you can. This could even be your family home.
4. Keep Paying UK Bills (If Possible)
Continue to pay your bills or property costs if you still own a home in the United Kingdom or have UK utility bills. This can keep your credit activity up and helps you maintain a strong UK credit score.
5. Use an International Mortgage Broker
An expat mortgage broker uk can certainly help you to secure a mortgage. They can connect you with specialist lenders who welcome expat applications and are much better placed to understand the intricacies of securing a UK securing mortgage as an expat / foreign national whilst living in the USA.
6. Save a Greater Deposit
A larger deposit reduces lender risk and boosts your chances of securing a mortgage. Aim for a minimum of 20-25%, but the remember: the higher your deposit, the better the terms and interest rate are likely to be.
7. Show Stable Income
Lenders seek assurance that you’ll be able to afford your mortgage. Maintain good, detailed records of your income, tax returns and employment consistency to strengthen your application.
8. Get a UK-Based Guarantor (If You Can)
If you have a close family member in the UK with a good credit history, ask them to guarantee your mortgage if possible. This can boost your chances of approval.
9. Consider Specialist Lenders
There are some specialist lenders in the UK that focus purely on expat mortgages. These lenders often have more relaxed terms and conditions, although your interest rates may be slightly higher.
How to Rebuild or Repair Your UK Credit Record
If you are short on or lack a UK credit history, repairing it can be a slow process. Here are some simple steps you can take to help improve your situation:
- Get a UK Credit-Building Card: These cards are designed for people who have poor or no credit history. Always make sure you use these responsibly and make your repayments on time.
- Take Out a Mobile Phone Contract in the UK: If you still visit the UK on a regular basis, a mobile phone contract in your name might help you rebuild your credit score.
- Check Your Credit Report: Get free reports from Experian, Equifax or TransUnion and see if they feature are any mistakes that can be corrected to improve your score.
- Pay Off Old Debts: If you have existing balances on any old UK credit cards or loans, settle them as quickly as possible. Any outstanding debts can harm your credit rating and make it harder for you to take out a UK expat mortgage.
Conclusion: How to Overcome Credit Score Obstacles
Although acquiring a UK mortgage from the US is certainly achievable, it does require a little more effort. The biggest barrier you might face is not having a current UK credit record, as this can send red flags to lenders.
However, by keeping a UK bank account open, using a UK credit card, paying a larger deposit and getting the support from a specialist mortgage broker, you can raise your chances substantially.
If you are determined to buy a home in the UK, start rebuilding your UK credit score immediately. The greater the effort you make now, the easier things will be when it’s time to apply for a mortgage.
With the right planning and a carefully-executed strategy, home ownership in the UK while living in the US can certainly become a reality.
Need Help Securing a UK Mortgage While Living in the US?
If you do want to purchase a UK property whilst you’re in the US, consult a mortgage specialist with vast experience in overcoming expat challenges and UK mortgage requirements. Contact us today for expert advice, tailored to your situation.