More UK Mortgage Availability for Expats

Published / Last Updated on 26/01/2023

UK mortgages on UK properties for non-UK residents and expats have never been easy to source due to the specialist nature of them.  In addition, Brexit added to the complexity with financial services not being included in the Brexit Trade Agreement meaning UK financial advisers, products and services cannot be marketed in EU countries resulting in many mortgage providers ceasing to offer expat mortgages.

At one point, there was only limited availability for non-UK resident mortgages.  Things appear to be softening again with nearly 300 different mortgage products available to expats and foreign investors.

Why is UK Property Popular?

  • Stability of the law.
  • Strict financial services regulation.
  • National Health Service.
  • Benefits system.
  • A growing population on a small island and in the words of Mark Twain “buy land, they are not making any more”.
  • A housing supply shortage meaning property is usually always in demand.
  • Diverse cultures that differ so much from the Islanders of Orkney, the Geordies of the North East, the Scousers of Liverpool, the Black Country heartlands to the Cockneys of London and the Celts of Cornwall, people of different descent and lineage, as well as the colourful nations of England, Northern Ireland, Scotland and Wales, with big cities to small villages and remoter communities as well as smaller islands, rugged landscapes, mountains, beautiful hills and nearly 20,000 miles of coastline (mainland and other islands),  there is a lifestyle and culture choice for everyone.
  • English is widely taught and spoken across the world, so language is not usually a barrier for anyone.
  • History and culture.
  • Strong rental market and regular capital appreciation.

Add to the above, a weak pound at present makes UK property an attractive investment for expats and some foreign investors.  Do not be fooled though by the seemingly large numbers of non-resident mortgage availability.  Mortgage rates can range currently from 9% pa at 80% loan to value (LTV) for more difficult cases to 3.7% for clean cases at 75% LTV.  In addition, application fees can be quite high.

Non-Resident Mortgage Issues

  • Most lenders have strict criteria in terms of your employment, your income, the country where you live.  For example, we know of only 1 lender that will offer a mortgage to an expat living in China.  Some lenders set acceptable and unacceptable countries. 
  • For some countries, there are UK legal sanctions e.g., for people in say Afghanistan, Iran and more recently Belarus and Russia. 
  • Some overseas territories have local laws may put off UK lenders e.g., Australia, New Zealand, Malaysia, and Thailand which, when interpreted suggest that it is against their laws for overseas firms i.e., not registered in their country to offer credit facilities, loans, and mortgages to residents if their country.
  • Brexit and the lack of clarity on financial services mean that countries like France and Finland have a total ban on ‘third country’ finances despite it being a UK transaction where they have no jurisdiction, but Germany, Spain and Ireland and others do allow reverse solicitation i.e., you approach us.

Tax and Duty Issues

Stamp duty land tax on the purchase price is already quite high in the UK but with a 3% additional levy for investment property and an additional 2% levy for a non-resident purchase, stamp duty rates can range from 5% on a small value purchase all the way up to 17% for a large value property.

Unless the property is your permanent main residence, second homes, investment ‘buy to let’ or holiday let property purchases will also be subject to income taxes on rental income, capital gains taxes on profits if you ever sell or dispose of the UK property and for all, UK inheritance taxes on death.

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