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Can UK expats get a mortgage in the UK?

09.05.19

It is difficult to say with any real confidence how many UK expats there are in the world because movement between countries today is very fluid. A number of reports in the last couple of years have suggested there are least 4.5 million (some go as far as 5.5 million) UK expats worldwide with around 1.3 million living in the European Union. Many expats still prefer to retain some kind of ties with the UK which is often a family home or a buy to let property. As a consequence, we are receiving more and more requests from UK expats seeking mortgage finance in the UK.

How big is the market?

While many high street banks have withdrawn from various areas of the mortgage market, interestingly, UK expat mortgages is not one of them. The fact that UK expats can obtain mortgage finance from high street banks, building societies, private banks and niche lenders reflects the growing size of the market. There are few reports which have committed to market liquidity numbers but we can safely say it is increasing. Interestingly, recent events regarding Brexit may well have encouraged further investment in UK property.

  • Currency movements

In the immediate aftermath of the EU referendum sterling went into freefall and at the bottom was down by in excess of 20% against the euro and the dollar. The delay in enacting Brexit has led to a small recovery in sterling but the relative spending power of expats in the Eurozone and the US has increased somewhat. As a consequence, demand for UK property by UK expats has risen.

  • Brexit uncertainty

Estimates suggest there are around 1.3 million UK expats living in the European Union with concerns and confusion regarding their long-term citizenship. We can safely assume that this uncertainty, in conjunction with currency movements, has encouraged more UK expats to reconnect with the UK property market.

There are many other reasons why UK expats are interested in UK property but Brexit has caused confusion and offered opportunities in equal measures.

Why do expats get mortgages?

There are various reasons why expats are looking to secure mortgage finance in the UK. The main ones include:

  • Property purchase

A property purchase in the UK may be ideal for holidays, family left behind or simply a long-term investment. Some UK expats have chosen to school their children back in the UK and would require a family home to qualify for local schools. Alternatively, many UK expats tend to be drawn back to the UK in their later life to enjoy retirement. Even a straightforward property purchase by a UK expat will face significantly more hurdles than a traditional mortgage application.

  • Buy to let

A number of overseas investors seem to have a different view on the UK property market and are keen to increase their long-term exposure. As a consequence, many UK expats have broken into the buy to let market to take advantage of the ever-increasing UK population and demand for private rental accommodation. There is also the opportunity to “return home” in the future and convert any buy to let investment into a family home.

  • Remortgage

Interestingly, while UK base rates stand at just 0.75%, European base rates are even lower at 0%. That said the UK mortgage finance market is extremely competitive and extremely liquid. Therefore there are some very attractive terms on offer for traditional buyers and UK expats. Whether these funds would be used to expand a property portfolio, fund a lifestyle overseas or simply take advantage of low interest rates to refinance high interest debts is a discussion to have with your mortgage broker.

Does it matter where expat lives?

Unfortunately for many UK expats, especially those who were a little more adventurous in their travels, your new homeland will be taken into account with any UK mortgage application. Whether there is a “restricted list” as such is debatable but the following criteria are often used when considering individual countries:

  • Is the country subject to international sanctions
  • Is there a weak reputation for regulation

We also know that a number of African nations and some in Eastern Europe can face greater scrutiny by UK mortgage providers. This is in no way a discriminatory move but purely and simply down to available data, regulations and the accuracy/inaccuracy of information required. When you also throw in the various money-laundering regulations introduced by governments around the world, this can be a very tricky area for UK mortgage providers. As a consequence, many will err on the side of caution when considering expat mortgage applications.

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