If you're an expat, you can get a mortgage in the UK, but you will need a specialist mortgage product designed for expats.
Owning a home in the UK can offer you a safety net if you return to the UK. It can also help if you’re worried about house prices going up while you’re away.
Many lenders consider expats a slightly higher risk, so the lending criteria and deposit requirements may be stricter than standard mortgages.
Many high street lenders don’t offer expat mortgages, so it’s worth talking to an expert broker who can help you find the right deal and ensure you meet the criteria.
Types of expat mortgages
As an expat, you can take out:
A residential mortgage for you or a family member to live in
A buy-to-let mortgage if you want to rent it out while you’re away
Buy-to-let mortgages are a popular option for expats, especially if you do not plan to return to the UK. With a rental mortgage, you can let out the property to tenants and earn rent while you’re living abroad.
For this reason, there tend to be more buy-to-let mortgage products available to expats compared to residential mortgages.
What currency should you make your payments in?
It’s best to keep your payments in the currency you’re paid in. This protects you from changes to the exchange rate. However, be aware that not all lenders will accept foreign currency.
Some may agree to fix your exchange rate at an agreed rate for a set period. Those who do will do a stress test, which is a way to manage risk if the exchange rate goes up or down.
Lenders usually stress test against the currency losing 20% of its value. So, if you’ve paid in euros and earn €100,000 a year, they’ll accept 80% of your salary when working out your affordability.
This can affect how much you can borrow, so factor this in when you’re working out the size of the loan you’ll need and the properties you might be able to afford.
