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  • Writer's pictureThe Cedar Crest Team

UK Mortgage Options and Trends for Expats and Foreign Nationals

Updated: Jul 21, 2021

Are you an expat or foreign national and found it challenging to get a UK mortgage? Maybe you felt the options were not competitive or there is not enough choice on the market? Up until recent years, this was the case for many expats or non-UK national looking to buy UK property. But the market has fortunately changed for the better.

The process is not as simple as it is for UK residents, but even during the current surge in demand caused by subsequent stamp duty holiday from COVID, there’ re still many attractive options available if you know where to look and what to be aware of.


Why Were Mortgages Harder to Get?


The UK is a highly regulated market and lenders are concerned about the possibility of money laundering. Some countries rank better than others in terms of transparency and anti-money laundering rankings, and this had historically deterred lenders from considering non-residents.

Assessing client documents from abroad is unfamiliar as different countries have different systems. This may have made the process more time consuming and difficult for lenders and hence a less profitable use of their time.

Finally, it would be more difficult for a lender to take legal action against somebody who is not physically present in the jurisdiction of the UK, so non-residents were naturally considered a higher risk to the point many mainstream lenders would not consider them.


What Is Different Now?


It has become more difficult in the last decade for UK first time buyers to get on the property ladder so the market for personal mortgages has been shrinking. This has caused lenders to look to other demographics for new business to remain competitive – expats and non-residents being one of them.


Previously, there were only a few options available from the traditional UK high street banks that have an international presence. As there was no competition, rates were typically high, and criteria restrictive.


However, there are now many non-high street, specialist mortgage lenders on the market that understand the intricacies of lending to foreign nationals and expats and purely focus on buy to let.


With rising competition in this space, traditional lenders have improved their offering for overseas borrowers and there is now much wider choice and better service on the market with more competitive rates.

Residency


The first question, regardless of your nationality, will likely be which country do you live in? The Financial Conduct Authority require lenders to maintain their own country risk categories but the Basel AML Index is a good place to look at where your country of residence may rank.


Fortunately, for popular expat locations such as Dubai, Singapore and Hong Kong, the majority of lenders in the mortgage market for non-UK residents accept these countries.


Employment


Lenders prefer that you to work for a multinational employer, especially if the company has a UK presence. However, this requirement is becoming more and more relaxed. If you work for a small local company or are self-employed, there could be extra work to do such a document translation. For self-employed people, the income requirement will likely be higher.


Interest Rates


Interest rates will always be slightly higher compared to borrowers living in the UK mainly because a non-resident is naturally considered higher risk. There is also the chance the likelihood the application will take more work.


However, the gap has narrowed significantly due to higher competition. Also, for those that buy property via a limited company, you can still claim your mortgage interest as an expense and offset it against your corporation tax bill.


Choosing A Lender


One tip on choosing a lender is to consider other factors, not just interest rate as the determinant. The lenders offering the lowest rates may not necessarily be experienced with non-resident applicants, offer the best service for or have accommodating criteria.


Application Process


Be prepared for an expat or foreign national application to be more in depth than a typical application.

The lender may be very inquisitive about your source of funds, due to money-laundering requirements. You will likely need to demonstrate a sufficient trail of evidence to show how the funds came into your account. In general, some steps may just take longer e.g. foreign documents being verified.


Let us help you


Cedar Crest is a FCA regulated mortgage solutions firm who works with a range of lenders from high street banks and building societies through to specialist lenders and private banks.

Our experienced advisers can help you identify financing solutions and secure a mortgage with the best lender for your circumstances with minimum hassle and without the need for you to contact or travel to the UK.


We have a physical presence both in Hong Kong and in the UK that ensures a seamless process and continuous communication with you from the point of engagement to mortgage offer. If you are considering buying UK property or need to finance today, get in touch to get started.


Be prepared for an expat or foreign national application to be more in depth than a typical application.

The lender may be very inquisitive about your source of funds, due to money-laundering requirements. You will likely need to demonstrate a sufficient trail of evidence to show how the funds came into your account. In general, some steps may just take longer e.g. foreign documents being verified.




>> LOOKING FOR A UK EXPAT MORTGAGE? <<


Learn about your UK Mortgage Options as an Expat or a Foreign National.

To discuss your situation, contact Cedar Crest Ltd – telephone UK T: +44 (0) 203 883 1017, HK T: +852 6645 4462 – email Info@cedar-crest.co.uk.


Your home may be repossessed if you do not keep up repayments on your mortgage.

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