First Time Buyer Mortgage for Expats

As a young expat considering your first move into owning property for the very first time, there will be a host of potential problems to overcome, particularly if it is your intention to fund the purchase through some form of finance.

Buy to let (BTL) or residential – You may be planning on returning to the UK and will be looking for a permanent home or you may be considering purchasing a rental property which could be your first step to creating a portfolio of properties. If it is the latter, you may want to consider if it is worthwhile creating a limited company to hold your property. Read our extensive guide on buy-to-let mortgages for more information.

Obtaining finance – There are currently around 25 lenders in the UK who will consider lending to expats but all have very different lending criteria. Having a good understanding of what that can entail will be useful as it will let you prepare yourself in advance of making an application to a lender.

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Other sources of finance

  • The bank of mom and dad – this has become a very popular choice for both parents and sons or daughters as a way of giving help with the deposit, normally around 25 percent of the purchase price of the property
  • Bridging Loans – These are loans used as a temporary measure to obtain finance quickly to secure a property. They are usually short loans to finance for periods of less than a year and should be set up to be replaced with a conventional mortgage arrangement for the long termFor mortgage information and making an enquiry read our read on bridging loans for Expats.
  • Secured lending – secured loans are more for people who have property but want to upgrade. They are only mentioned here for information as they are not really considered for first time buyers. For mortgage information and making an enquiry read our read on secured loans for Expats..

At we can connect you to specialist mortgage brokers in the UK who have the experience to walk you through the whole process. In this age of globalisation and flexible labour markets, people working overseas for a few years earning good money, will often
want to put that money into something they can benefit from in the future and often, property will be their preferred choice.

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Lender considerations

  • Credit Scoring – Lenders always check an applicant’s credit score using either their own systems or through specialist companies such as Equifax. Strange may it appear but to get a good score you will need to have had credit of some form in the past, otherwise you won’t get a score. Lenders just want to see that you have had a commitment in the past that you have honoured in full.
  • Correspondence address – Having a correspondence address is important as it makes you traceable for lenders. This will usually be your parents address or a close family members address but always make sure it is someone that you trust as some of your post will inevitably end up going there.
  • Credit footprint – If it can be arranged then you may want to keep at least one UK current account open and perhaps a credit card but make sure that the bank will allow the accounts to remain open while you live abroad.
  • Employment – you should try to have your new UK employment arranged before returning to the UK as any lender need to be satisfied with you earnings going forward to agree to a mortgage. If you are returning with the same employer, things will be much easier as you have a history with that company. If you are moving to a new firm you may need to have been employed for at least three to six months before you can apply for a mortgage but if you are staying within the same industry then a letter of appointment with a start date and salary may suffice.

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Other considerations

Having found your property and sorted out your finances there are a few other things to consider, some of which are shown below.

  • Solicitor and conveyancing – Whatever type of property you intend to buy, you will need to engage with a solicitor at some point to finalise the deal and ensure that everything has been carried out properly. For more information and guidance on this please read our residential conveyancing guide for buying and selling property in the UK.
  • Buildings insurance – The lender will require that you take out buildings insurance covering the rebuilding cost of the property. With this in mind, it may be sensible to avoid buying property that could be subject to flooding as this could render the property uninsurable.
  • Personal insurance – You may wish to consider insurance for yourself or your family to protect against future events that may cause you to be unable to repay the mortgage. A short list of the things to consider are:
  • Death – if you were to die, would your family be able to remain in the property. Mortgage protection insurance can protect against this risk.
  • Critical Illness insurance – it is now more likely that people with mortgages are more likely to suffer a critical illness that leaves them financially insecure than they are to die. A suitable critical illness insurance policy can protect against this. Read our guide for more information on critical illness insurance.
  • Accident sickness and unemployment insurance – this is another area that can cause a financial difficulty but one which can be protected against through a suitable insurance policy. Read our income protection insurance guide for more information.

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Finally, it is important to note that within the UK, most mortgages and financial services products are regulated by the financial conduct authority (FCA) who are empowered to issue fines and or reimburse people who suffer a loss through no fault of their own. If you receive poor service you can complain in the first instance to the product provider and if that doesn’t resolve the problem you can take the matter to the financial ombudsman service, where it will be investigated and resolved.

Where there is an exception to this is with BTL or commercial lending as currently these products are not regulated in the way residential lending is.  However, most mortgage intermediaries will tend to handle these mortgages as if they were regulated but this wouldn’t protect you in the event of loss.

Procedure for obtaining an expat first time buyer mortgage

1. First considerations for obtaining an expat first time buyer (FTB) mortgage

The first thing to consider as a first time buyer is how you are going approach this as FTB expat mortgages can be very time consuming to organise. It is for this reason that most expat FTBs will turn to an experienced expat mortgage broker to handle things for them rather than attempt to deal directly with a lender. An FTB expat mortgage broker with proven experience will understand the market and will be better placed to guide you through the process and hopefully obtain the best deal possible for you.

It should be noted that expat mortgage brokers with the right experience to obtain expat FTB mortgages are thin on the ground and although there are many regulated general mortgage brokers operating within the UK, you will find in practice that very few actually handle expat FTB mortgages on a regular basis.

Also be aware that if you are seeking a mortgage to purchase an investment property such as a buy to let (BTL) property or an house of multiple occupancy (HMO) property then the mortgage processes are currently unregulated and should something go badly wrong you will not have access to the same protections that would apply to UK residential property purchases.

Expats buying residential property in the UK to live in will be fully protected in the same was as a UK resident would be.

The procedure steps shown assume that you will be using an experienced expat BTL mortgage broker to handle the process on your behalf.

2. First contact with your expat BTL mortgage broker

Whether you are communicating with your mortgage broker by telephone or email or meeting face to face your expat BTL mortgage broker should provide you with certain information about themselves and how they operate:

  • Identity – Who they are and how to contact them
  • Regulation – Explain how they are regulated to carry out mortgage business. All mortgage advisers in the UK are required to hold permissions to do so from the financial conduct authority (FCA) which they obtain through being either directly authorised by the FCA or by being an appointed representative of a network who is authorised by the FCA.
  • Terms of business – Provide you with their terms of business. This will include information on how they will charge you for their time and explain your rights in the event something goes wrong.

Having got that out of the way your FTB mortgage broker will gather comprehensive information on your circumstances. This process is called fact finding and it is absolutely essential that it is carried out thoroughly as the information gathered will form the basis for deciding on the mortgage product most suited to your needs.

If the expat FTB mortgage you seek is a regulated product then should there be a dispute at a later stage the information you provided at fact find will be taken into consideration and may affect the outcome.

3. Obtaining an agreement in principle for your expat FTB mortgage

With the fact find information to hand your FTB mortgage broker will research the market and identify a lender and product that he or she believes would best suit your needs. Many people think this is simply a question of finding an expat FTB mortgage provider offering the lowest rates of interest or low arrangement fees but in fact many other factors can come into play. Some such situations could be:

  • Time constraints – if a lender is known to be slow to consider a case or is known to complicate the process and you need a decision quickly then you may be prepared to accept a slightly higher interest rate if it lets you complete the FTB mortgage within your fixed timeframe.
  • Lender criteria – lenders all have different criteria under which they will lend and it may be that the lender with the best rates may place you just outside their accepted criteria. You would then have to make the best deal possible with a lender who is prepared to accept you.
  • Credit rating – the best rates and terms are usually only available to those with a clean credit rating. Where this is not the case lenders will take account of this in the terms they offer and may even refuse to accept your application.

Having decided on one or two suitable products your FTB mortgage adviser will discuss them with you and when you agree on the most suitable one for your circumstances, your FTB mortgage broker will obtain a decision in principle from the lender. This is not a binding agreement but is only an indication that if the supporting mortgage information you provide with the formal application confirms what has been indicated for the decision in principle then there is a strong possibility that the lender will accept you.

Please note that the lender will carry out a credit check on you to assess your credit rating.

4. Submit the full expat FTB mortgage application

With a decision in principle acceptance you will be clear to make your formal application for your expat FTB mortgage. Your expat FTB mortgage broker will do this in conjunction with you as the application form needs to be accurate and will require a number of supporting documents, such as:

  • Proof of identity – documents such as passports and driving licences are normal.
  • Permanent address – Normally utility bills and bank statement type documents will be accepted.
  • Expat employment – Proof of income from employment or business will be required. Payslips and business accounts are usually used for this.
  • Affordability – Bank statements let the lender see your income going through but they also allow the lender to see how you spend that income. Today lenders look at a borrowers lifestyle to ensure that any expat mortgage offer they make will be affordable to their client if the clients lifestyle is maintained.

5. Lender reviews your expat FTB mortgage application

On receipt of the formal expat FTB mortgage application the lender will review the information provided. In all likelihood the lender will ask for further information or documents to be provided and this process may be repeated several times until the lenders application processing team becomes satisfied that the case is sufficiently compliant to go to underwriting.

As part of this process the lender will instruct a valuation on the property. You will be expected to pay for this but will have no rights to see the valuation report. The lender will use that valuation report to decide how much they would be prepared to lend against that property.

At this point and if the valuation given in the report meets the lenders requirement the mortgage application review team will take a final review of the case and decide whether to send the case for underwriting or reject the application.

6. Lender conducts final review of your expat BTL mortgage application

The underwriter is the lenders final decision maker and will review the whole case and check it carefully against the lenders lending criteria. If the underwriter is satisfied an offer for a FTB mortgage will be issued. Copies are usually sent to your solicitor and to your mortgage adviser who will check the offer and alert you to anything that is not as agreed.

Note that by this time your expat FTB mortgage broker should have issued you with a letter outlining his or her reasons for advising you to accept that particular offer.

7. Lender issues your expat FTB mortgage offer

If the lender issues an FTB mortgage offer it will be sent to your solicitor with a copy to your FTB mortgage broker who will check the offer and alert you to anything that is not as agreed.  This is a formal document and it will show the amount of loan that is available and the monthly repayments. It will also provide the term of the mortgage and the terms and conditions under which the offer is made.

8. Solicitor receives your expat FTB mortgage offer

Once the solicitor has received the offer they should complete any checks and searches on the property, exchange contracts and move to finalise the purchase. Your solicitor will be the person that will draw down on the loan and arrange to pay the sellers solicitors for the property and pay any taxes such as stamp duty that may be required.

This whole process from first contact with your FTB mortgage broker to your solicitor concluding the purchase can take a long time and anything between 6 weeks to 6 months would be considered as fairly normal.

If your reasons for purchasing the property is for investment purposes such as a buy to let (BTL) property or a house of multiple occupancy (HMO) then you should have by now made arrangements to handle the lettings for the property. This would normally be arranged through a letting agent somewhere in the vicinity of the property.

Scottish Law

If the property you intend to purchase is in Scotland then you will find the legal system to be slightly different. It is normal in Scotland for offers to purchase a property to be made through a solicitor which usually means engaging a solicitor right from the beginning.

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