UK Mortgage Options and Trends for Expats and Foreign Nationals

The Cedar Crest Team
Jul 14, 2021
3 min read

Updated: 4 days ago

Are you an expat or foreign national and finding it challenging to secure a UK mortgage?

Perhaps you feel that the options available are still not competitive or that there is insufficient choice in the market?

Fortunately, in recent years, the landscape has significantly improved for expats and non-UK nationals looking to purchase property in the UK.

The process of securing a UK mortgage as an expat or non resident is not as straightforward as it is for UK residents. However, despite ongoing regulatory requirements and tighter affordability assessments, there are still many attractive options available if you know where to look and what to be aware of.

Why were mortgages historically harder to obtain?

The UK mortgage market is highly regulated and lenders place significant emphasis on anti money laundering controls and client verification. Countries differ in terms of transparency and regulatory standards, which historically led some lenders to limit or exclude non resident applicants altogether.

Assessing documentation from overseas can also be more complex, as income structures, tax systems and reporting standards vary widely between countries. This often made applications more time consuming and less commercially attractive for lenders.

In addition, enforcing legal action against borrowers who are not physically present in the UK can be more challenging. As a result, non residents were traditionally viewed as higher risk, meaning many mainstream lenders chose not to serve this market.

What is different now?

Over the past decade, the UK mortgage landscape has evolved significantly. With affordability pressures continuing to affect domestic buyers, lenders have increasingly diversified their focus to include expats, foreign nationals and international investors.

Previously, only a small number of UK high street banks with international operations offered mortgages to non residents. Limited competition meant higher rates and restrictive criteria.

Today, there is a much broader range of specialist, non high street lenders that focus specifically on expat and foreign national lending, particularly within the buy to let market.

Increased competition has also encouraged traditional lenders to enhance their overseas borrower propositions, resulting in greater choice, improved service and more competitive pricing.

Residency

One of the first questions lenders will ask is where you are resident, regardless of nationality. Lenders are required by the Financial Conduct Authority to maintain their own country risk assessments, often informed by recognised indices such as the Basel AML Index.

Fortunately, most mainstream expat locations, including Dubai, Singapore and Hong Kong, are widely accepted by UK lenders operating in the non resident mortgage market.

Employment

Lenders typically prefer applicants employed by multinational companies, particularly those with a UK presence, although this requirement has become increasingly flexible.

Applicants working for smaller local firms or those who are self employed may need to provide additional documentation, including translated financial records. For self employed applicants, income thresholds are often higher and affordability assessments more detailed.

Interest rates

Mortgage rates for non residents are generally slightly higher than for UK based borrowers, reflecting the additional complexity and perceived risk involved in the application process.

That said, the pricing gap has narrowed considerably in recent years due to increased competition.

For those purchasing via a UK limited company, mortgage interest may still be treated as a deductible expense for corporation tax purposes, subject to individual circumstances.

Choosing a lender

When selecting a lender, it is important to look beyond headline interest rates. The lowest rate may not come from a lender experienced in dealing with non resident applications or one with flexible criteria and efficient processes.

Service quality, underwriting expertise and clarity around documentation requirements are often just as important as pricing.

Application process

Expat and foreign national applications are typically more detailed than standard UK applications.

Lenders will carry out thorough source of funds checks in line with anti money laundering regulations, requiring a clear audit trail showing how funds were accumulated and transferred. Verification of overseas documents can also take longer, so additional time should be factored into the process.

How we can help

Cedar Crest is an FCA regulated mortgage solutions firm working with a broad range of lenders, from UK high street banks and building societies to specialist lenders and private banks.

Our experienced mortgage advisers help identify the most appropriate financing solutions and manage the application process from start to finish, without the need for you to travel to or contact lenders in the UK directly.

With a physical presence in both Hong Kong and the UK, we provide seamless communication and ongoing support from initial enquiry through to mortgage offer. If you are considering purchasing or refinancing UK property, get in touch to explore your options.