Why is it harder to get a mortgage as an expat?
There are various reasons why mortgage lenders will be, on the whole, more reluctant to lend to expats. These reasons are centred around the difficulty in verifying the borrower’s financial stability when they have been living abroad for a potentially very long time.
If a mortgage provider sees a certain kind of customer as higher risk then they will either refuse them a loan altogether, or offer higher interest to offset the risk.
But while, as an expat, you might find it harder to get a mortgage and might pay a little more when you do, this doesn’t mean you have to break the bank. Compare mortgage deals using Money Expert’s online comparison service to see what kind of great mortgage rates you could be enjoying.
Overseas income and credit rating
If your primary income is earned overseas, then this presents problems for the lender on various levels.
Things like the sustainability of your income, as well as its actual size are harder to ascertain given things like fluctuating exchange rates. The lender will also have more difficulty identifying your employer if they are based abroad. The difficulty in getting hold of all of the relevant information, and the associated risk of fraud, lead many mortgage lenders to flat out refuse expats, or to at least charge higher rates to those they do lend to.
It’s a similar story when it comes to credit ratings. Your credit history is important to a mortgage lender as it allows them to see how viable a candidate you are for borrowing money. If you’ve lived abroad for a relatively long time, then your credit history might not be traceable at all. This does not necessarily make you a poor candidate for lending, but it does make you an unknown quantity and this leads lenders to err on the side of caution.
Can expats get buy-to-let mortgages?
The demand for expats to take out buy-to-let mortgages and capitalise on the rental market in the UK has grown steadily in recent years.
Providers of buy-to-let mortgages often require relatively high deposits, reflecting the increased uncertainty of income from rent. Given all of the above, expats who want to take out a buy-to-let loan should expect to pay a higher deposit upfront.
This shouldn’t put you off though if you’re set on getting hold of a UK property to rent out. Ensure that you shop around online to find the best mortgage deals.
Whether you’re looking for a buy-to-let mortgage or a residential mortgage, as an expat you should use our free and impartial mortgage comparison service to make sure that you’re getting the best rates available.