Many folks wonder whether it's alright to use income from abroad to secure an expat mortgage. We've walked that path ourselves and discovered it's entirely doable. Our piece delves into the hows, offering handy advice and actionable steps.
Stick around for some enlightening insights!
Key Takeaways
- You can use money from abroad for an expat mortgage. This includes income from investments, rental properties, pensions, and other assets outside the UK.
- Banks want to see that your foreign income is steady. They will ask for documents like bank statements and tax returns to check this.
- Working with a broker who knows about expat mortgages can help a lot. They can guide you and improve your chances of getting a good mortgage deal.
- Making sure your credit in the UK looks good is important too. This shows banks you are good with money.
- Lenders worry about currency exchange risks. If the value of money changes a lot, it could affect your mortgage.
What is an Expat Mortgage?
An expat mortgage lets people who live abroad buy a home in the UK. This type of mortgage is for those who don't live in the UK but want to own property there. We find that most banks ask for at least a 10% deposit from buyers.
They also look closely at your job, how much you earn, and your past with money.
We often suggest getting help from brokers who know a lot about expat mortgages. They can guide you through the whole process. It's important because this isn't just any purchase – it's about buying a piece of home, no matter where we are in the world.
Can Foreign Income Be Used to Qualify?
Yes, you can use foreign income to qualify for an expat mortgage. It's all about showing lenders that your overseas earnings are stable and reliable.
Types of acceptable foreign income
We often get asked if foreign income can help secure an expat mortgage. The answer is, yes, it can. Here's a list of types of acceptable foreign income that most lenders will consider:
- Foreign investment income - This includes profits from investments outside your home country. We've seen clients use this to boost their application.
- Rental income from overseas properties - Owning property abroad isn't just about having a holiday home; it's also a source of income that lenders like to see.
- Overseas pension income - If you're retired and living abroad, your pension from back home counts too.
- Income from foreign assets - Got stocks or bonds overseas? These can also be included.
- Offshore investment earnings - Similar to general foreign investments but specific to offshore ventures.
Our experience shows that while all these are viable, most lenders prefer applicants who are UK domiciles, paying taxes and filing accounts in the UK. This requirement ties back to how they assess financial stability and risk associated with currency exchange rates.
Documentation required for foreign income
We all know securing an expat mortgage may seem a bit challenging. The crux is in demonstrating consistent income, even if sourced internationally. Here are the documents you'll require:
- Bank statements from the previous six months. These exhibit your regular income.
- Tax returns from the preceding few years. They authenticate your earnings to lenders.
- Two types of photo ID. This may well be your passport and driving licence.
- Utility bills or bank statements as evidence of residence.
- For those working on a contractual basis, current contract details are necessary.
- Should you be self-employed, certified accounts from your enterprise are compulsory.
Each piece of evidence aids lenders in better understanding your financial standing. With these substantiations prepared, the expat mortgage application process might just become less formidable!
Factors Lenders Consider for Expat Mortgages
Lenders look closely at how steady your foreign income is and how changing money values might affect your mortgage. They want to make sure you can keep up with payments, even if things change abroad.
Currency exchange risks
Currency exchange risks are a big worry for us when we think about expat mortgages. The value of money can go up and down because of changes in the exchange rate. So, if we earn our income in another currency, this can make things tricky.
Banks try to deal with this by using fixed exchange rates. They do this to make sure they don't lose money if the currency's value falls.
For example, if we get paid in US dollars but want a mortgage in the UK, a bank might reduce our income amount on paper. This is because they're worried the dollar might drop against the pound.
We've seen banks like Santander and HSBC use different rates for different currencies. It means they might count less of our income depending on where it comes from.
Our experience showed us that earning in US dollars could be both good and bad. Good, because it's a strong currency; bad, because any change can impact how much we can borrow. Next up, let's talk about how stable foreign income needs to be for lenders to give us a mortgage.
Stability of foreign income
Lenders need to see that our foreign income is regular and stable. They are keen to confirm our ability to maintain mortgage repayments over time. Consequently, they check the source of our income.
If it's from employment or a business overseas, that's acceptable, provided it's steady. They view fluctuations in earnings due to currency value variations as a hazard.
We've found that producing evidence of steady income significantly assists. This includes providing documentation such as pay slips or tax returns from the previous few years. The more comprehensive our records, the simpler it is for lenders to have confidence in providing us with an expat mortgage.
Additionally, if we possess a solid credit history coupled with this consistent foreign income, we're more likely to receive approval.
They also express concern about currency exchange risks, as it impacts our income stability. Therefore, they may request proof that we’ve contemplated this and are prepared for significant changes in exchange rates.
Each lender has differing criteria on what qualifies as steady income, and how they assess the impact of currency changes on our earnings.
Tips for Securing an Expat Mortgage
Getting an expat mortgage might seem tough, but a few smart moves can make it smoother. If you're aiming for one, working with a broker who knows the ins and outs of expat mortgages is key.
They can guide you through. Also, making your credit look good will help a lot. It shows lenders you're reliable with money, which is just what they want to see.
Work with a specialised expat mortgage broker
We have found that teaming up with a specialist expat mortgage broker makes a big difference. These brokers know all about overseas income checks. They can help keep your UK financial ties strong, which looks good on your mortgage application.
They're also great at talking to lenders to get you the best deal for borrowing more money.
Our personal story proves this works. We teamed up with an expat finance specialist for our first home abroad. This expert was on point in guiding us through each step and knew how to handle the paperwork for foreign income proof.
With their support, we managed to negotiate better terms for our mortgage, showing that having an expert by your side is key in property investment as an expat.
Strengthen your credit profile
We know that getting a strong UK credit score helps us when we want an expat mortgage. But it's not the only thing lenders look at. They also see how well we manage our money in general.
To make our financial profile better, we first sign up on the electoral roll if possible. It's a simple step, but it shows lenders we have a fixed address in the UK.
Keeping a current account in the UK is another smart move. It proves to lenders that we still have active financial ties to the country. Even if we're living abroad, this shows them that managing our money back home is something we take seriously.
These steps don't just help with mortgages; they improve our overall financial health as well.
Conclusion
Yes, you can use foreign income to get an expat mortgage. It's all about showing the right type of income and having your documents in order. Make sure your foreign earnings are steady and can be turned into UK money without big risks.
Getting help from a broker who knows about expat mortgages is a smart move. They can guide you through the process. So, with careful planning and the right support, buying a property abroad isn't out of reach.
