What is an expat mortgage?

Many UK nationals have chosen to expand their horizons to the wider world, either following job opportunities or enjoying a different climate. However, just because you have chosen to spend some years outside of the UK, it doesn’t mean you have to cut all ties to home.

Buying a British property from the position of being resident in a foreign country is more complicated than if you are still living and working in the UK. From the simple logistical difficulty of communicating while in different timezones through to proving your income and credit record – expats can have a hard time getting a mortgage.

Thankfully, The Mortgage Hut is here to help. With a team of specialists well-versed in obtaining mortgages for expats, we can provide the expert assistance that you need for a smooth and successful mortgage.


Expat mortgages

Proving viability – your income and beyond

At the core of every mortgage agreement is a risk assessment taken by the mortgage underwriters that determines your suitability.

Many high-street lenders lean heavily on automatic systems to provide a first-level of assessment, and unfortunately this can turn away expats at the door. Understanding anything that is out of the ordinary, such as a salary in a foreign currency, or the complexities of another nation’s tax laws, can produce non-standard results that automated systems reject.

At The Mortgage Hut we work with a huge range of lenders who all look deeper into your application, looking at the reality of the situation behind the basic paperwork. With a specialist team dedicated to giving expats the opportunities they deserve, we can make sure that your application is properly and fairly assessed the first time around.

Determining income

Your annual income is a key factor in determining your mortgage. Not only is it used as part of the calculation that determines the maximum size of your loan, but it is also a major part of determining affordability – a central criteria for risk assessment.

Being paid in a different country, with a non-Sterling currency and different systems for taxation, can mean your income is more complicated that just a single report of pre-tax salary.


Our experts work with a wide variety of factors to help you calculate your true financial status:

  • Basic salary – looking at your guaranteed annual pre-tax income is, of course, the first step, but it doesn’t mark the end of the road.

  • Commission – do you take in money from sales commission? Is this regular enough to be considered stable for your mortgage application? Does it fluctuate wildly? Making a calculation to convert the history of your commission payments into an approved assessment of future earnings is something we can help with.

  • Bonuses – a regular annual bonus could be taken into consideration when calculating overall income, or you may want to look for a mortgage that has a no-fee early repayment system, allowing you to shave years off your loan when the bonus comes in.

  • Taxes – our specialists can advise on the tax considerations when buying in the UK, as well as help you present your personal accounts with the tax for your country of residence explained to the end underwriter.

  • Exchange rates – exchange rates can change in an unpredictable way during the years of your mortgage, and you will be paying off the loan in British pounds, so assessing your income with the exchange rate considered is important. Lenders have a need to be conservative, so are unlikely to rely completely on the rate of the day, but are going to weigh the currency exchange by historical factors and a margin of safety. We can help you understand these equations.

  • Frequency – if you are paid in an unusual fashion then this may have an income on your mortgage. We’ll be able to help you present your finances in a compatible way to the lender.

The importance of a credit history

All UK lenders work with the credit reference agencies here in the UK in order to obtain a detailed picture of your financial responsibility and help with their consideration of your application.

Unfortunately, if you have been abroad a long time (more than six years) then you will have no credit record in the UK, and even if you have been gone for less time, what does appear will be filled with periods of inactivity.

There are many factors that can affect your UK credit report when you have been away. Have you maintained a UK bank account and ensured that you left behind no debt? Did you close all your accounts entirely and have been exclusively using those from local (to your new country) banks? Is your main bank account with a major multinational bank, meaning it was easily transferred with you when you left and can be relied on to provide you with a good record here?


What if I have no credit history?

Expat income

Obtaining a mortgage with no credit history presents an additional hurdle to overcome. Like any hurdle, however, it is not impossible to leap – merely something that must be considered when looking at mortgage products.

No credit history can often be perceived as bad as, or even worse than, a poor credit history – often lenders feel they have no choice but to assume the worst when there’s no record at all.

Whether you have no credit history any more, or a bad credit history that is likely to cause you problems, we can help at The Mortgage Hut. Our dedicated poor credit team can work with your expat advisor to open up new avenues of opportunity and recommend lenders that are happy to consider you.

It is worth spending the time prior to your mortgage application analysing and improving your UK credit history. This can be done by making sure you have a UK bank account in place and maybe applying for (and using wisely!) a UK-based credit card. Specialist UK accounts exist for expats, meaning you can build your credit history up through a trusted provider without needing to have a residence in the UK.

Sadly, none of the credit reference agencies work in an international capacity, so there is no method by while you can transfer a strong credit history from one country to another.


Understanding affordability

Both income and credit history are important considerations for a mortgage lender, but neither are of greater importance than affordability. Affordability can be seen as a measure of your disposable income – the amount you have left at the end of a month once your regular outgoings have all been paid for.

Affordability shows the lender whether you are capable of easily managing the regular mortgage repayments or not. With a strong affordability score, you are a far smaller risk for the provider, but the inverse is also true and if you life your life constantly dipping into an overdraft or clinging on desperately for the next pay packet, then it will lower the number of mortgage products available to you.

At The Mortgage Hut we always recommend a period of living frugally prior to making a mortgage application. Cut down on the non-essential spending in your life, and show a commitment to your finance management.


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