Obtaining a UK Mortgage When You Are An Expat or Overseas Resident
To obtain a expat mortgage whilst based overseas for the UK property market isn’t always that easy anymore as clients are dealing with banks that are based overseas generally. These overseas lenders take a more serious view to applications as they don’t always have the means to credit check applicants income sufficiently. There is the important fact that income can be from various sources or that the applicant is self-employed so does not derive income from a standard working salary such as being employed by an employer. Overseas expatriate mortgage lenders will invariably use a number of ways to assess the finances and the source of income for the mortgage they are underwriting on behalf of the client. Firstly lenders will use a stress tested rental ratio and were are assuming this is a buy to let mortgage as most expats or overseas residents tend to buy for investment purposes. A lender will do this is working out that the rent is 125% of a stress tested rate. At the moment this is 5% or 6% dependent on which lender is approached. If this doesn’t sufficiently cover financing the property the lender will then look at the income and expenditure of the applicant. Lenders generally like to see that all expenditure for day to day living includes all living costs, mortgages, loans and day to day living expenses and doesn’t exceed 60% of the applicants total income. This is known as a debt to income ratio. If this passes the lender will then ask the applicant to supply the below documentation
Documents Required To Support an Expat Mortgage Application
· Proof of ID (Passport & Drivers Identification Licence) 1 each for joint application·
. Proof of Address(Utility bill or Rental Lease)
· 6 Months Bank Statements
· 6 Months Salary Pay Slips
· Current statements of existing mortgages
· 3 Months bank statements of rental income monies (if any)
· Others upon request(assets, bank deposits, savings, liabilities etc)
The general process to proceed on applying for a mortgage is as follows but will be different for all lenders as they have their own in-house criteria of rules and the way they settle and process mortgages through to the completion stage.
Process for Applying for an Expat Mortgage
1. Prepare application and supporting documents
2. Package and submit to lender
3. Provide further documents lender requires
4. Lender grants Agreement to Lend*(Agreement In Principal) (3-4 Weeks)
5. Agreement In Principal sent to client
6. Client signs and returns Agreement In Principal top the lender
7. The lender creates a mortgage account for the clients mortgage payments and rental income to be deposited
8. Client pays lender fee
9. The lender instructs valuer to value the property
10. Client pays valuation fee
11. Valuer surveys property
12. Valuer returns valuation report to lender
13. Lawyers instructed
14. Lawyers performs searches and prepares Report on Title
15. Lawyer submits Report On Title to lender
16. Lender releases funds to lawyers
17. Lawyers exchanges funds and title
18. Property Completed
19. Full process 8 to 12 weeks
Clients will need to be aware of the tax implications and stamp duty requirements which can be found on the below websites
https://www.gov.UK/stamp-duty-land-tax/overview
*(AIP) Agreement In Principle to lend
Gerard Ward has experience arranging UK mortgages for 15 years and assists overseas purchasers and UK expatriates buying in the United Kingdom and around the world. He can also source mortgages in various other countries upon request.
