What your clients need to know about expat mortgages – Ipswich BS

What your clients need to know about expat mortgages – Ipswich BS

 

Applying for a UK mortgage when based overseas, especially when you are paid in a foreign currency, is a more difficult process than a regular mortgage application.

The Mortgage Credit Directive (MCD) brought in by the European Commission in 2016 turned many high street lenders off foreign currency mortgages due to the increased administrative and regulatory burden of monitoring foreign exchange rates.

This in turn made expat mortgages much less cost-effective for many of the larger lenders who rely on automated affordability checks, reducing the range of options available for borrowers.

Expat mortgage criteria is often more complex, the application process more complicated, and the products themselves more expensive than a standard UK residential mortgage.

There are essentially two types of expat mortgage – if the property is to be their primary residence, expats will require a residential expat mortgage.

However, if the borrowers are looking to make rental income while they work abroad, they will require a buy-to-let expat mortgage.

In the case of both, lenders will usually require a substantial deposit, and borrowers will be assessed on a wide range of factors to prove affordability and secure the mortgage. They include:

 

Buy-to-let mortgages are assessed on the expected rental income of the UK property rather than the income of the applicant, so this should be enough to secure the loan and show repayments can be met. For this reason, the currency the applicant is paid in is less important.