Our guide to Expat Mortgages

Guide to expat mortgages

What is an Expat mortgage?

An expat mortgage is slightly different to a normal UK mortgage and is used to help anyone living and working overseas to invest in property in the UK while they’re away from home.

What’s different about an expat mortgage?

Essentially the mortgage is the same – the lending company (either a bank, building society or specialist lender) lends you the money you need to purchase your UK property in exchange for interest paid over an agreed length of time.

However, there are two main differences when it comes to the terms and conditions of the loan.

Firstly, your lender will probably have tougher conditions before they’re prepared to lend you the money.

This could be to do with your salary, where you live, if you have a UK bank account, can you prove the address you live at in the country you reside, where your deposit is coming from and your UK credit history. They’re likely to be a bit stricter as they see expats as slightly higher risk.

Secondly, they may ask for a larger deposit amount than we typically expect for a UK based mortgage. It is normal to be asking for a 25% deposit. The lender will also want proof of where you’re getting the deposit from – this is to meet strict money laundering rules. As long as your deposit is coming from your savings, an inheritance, a gift or the sale of another property there’s no issue. There just needs to be a paper trail to show it.

The lenders will look closely at the Loan To Value (LTV) rate. This is the amount you’re borrowing in relation to the value of the property. In some cases, specialist expat mortgage providers are looking for 60-80% LTV.  So a 20% minimum deposit is required, but can sometimes be as high as 40%.

What about remortgaging?

There are still the same rules in place but there is nothing to stop you remortgaging your UK property. You can even raise extra funds for debt consolidation, deposits to buy a property in the country you now reside or to buy more investment properties.

How are interest rates affecting expat mortgages?

None of us know what the future of the UK property market is going to be over the coming months, with experts divided over whether rates will go up again between now and the next election. One thing everyone is clear about though, it is extremely unlikely rates will reduce back down to the low figures witnessed in recent years.

If your UK mortgage is based on a ‘fixed rate’, which means your monthly mortgage payment has stayed the same over the past few years, there will be a point in time when the deal ends, and your payment moves to being based on a ‘variable rate’. In other words, when the Bank of England change interest rates, your lender will respond by changing their own. In most cases, you will find your monthly payment increases.

If your mortgage deal is coming to an end between now and summer 2024, we recommend getting a review as soon as possible.

How do I find the best expat mortgage rate?

That’s easy. Talk to an expert!

Expat Mortgage Expert is based in Dubai and has access to all the specialist lenders in the market. Ryan Radford is on hand locally to guide you through the process – from reviewing your current situation, to completion.

Simply contact us today for expert advice and support.

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