There are many reasons why British expatriates seek to purchase a property back in the UK. Some of the most popular expatriate destinations, such as the Middle East, have favourable tax conditions and high salaries, widening the opportunity to invest in high-value property.
You may be considering relocating back to the UK after retirement, for example, or you might have adult children who have remained in the UK and you wish to buy property for them to live in. It’s also a good long-term investment option, especially as the uncertainty surrounding Brexit and the falling value of the pound have pushed house prices down in some areas of the UK.
Whatever your own reason for choosing to buy a property in the UK while living abroad, it can be more difficult to secure a mortgage as an expat, despite a high net worth. In this guide, we explore how to get an expat’s mortgage for your UK property.
One of the biggest issues facing British expatriates looking for a mortgage for a property in the UK is that there are only a limited number of providers. Many of the best-known mortgage providers, including high-street banks, will not offer a mortgage to expatriates, despite their international wealth. There are some banks with a large global presence that do offer expat mortgages to the right clients. You may also need to investigate smaller and more specialist lenders and building societies. Engaging the services of a mortgage broker with expertise in expatriates is worth doing to access the best offerings on the market.
Then there is the issue of eligibility and acceptance. Usual financial profiling involves having a recent UK credit history and appearing on an electoral register. Regardless of how wealthy you are in your new home country, these basic checks can lead to applications being rejected. Therefore, it’s imperative to use a specialist lender with a more sophisticated approach to risk assessment and lending criteria.
As well as restricted choice, expat mortgages are also more expensive than traditional UK mortgages. Alongside a minimum deposit of around 25% of the property’s value, the interest rate is often much higher – costing more than a typical buy-to-let mortgage.
There may also be some limitations levied, depending on the location you now live in. There are certain countries that are considered riskier, so if you live in one of these, you will have to provide further documentation to progress with the mortgage. For example, if you work for a multinational corporation, your employer may be able to give you a reference.
As an expatriate, you will be subject to a higher level of identity checks than when you were living in the UK. You may even be required to travel to the UK to visit the lender in person, although for high-net-worth professionals making sizeable investments, the lender could send a representative to your home country instead.
There are certain practicalities to consider too. For example, the exchange rate can affect the total amount you borrow. Some lenders will take a percentage off the exchange rate to allow for fluctuations. You will also have to allow for a time difference, which can make it logistically complicated to arrange applications and documentation to progress your mortgage.
If you are looking to make an international move away from or back to the UK, Cadogan Tate’s team of international movers can help to arrange a hassle-free relocation.