UK Mortgages on UK Property for British Expats & Overseas Residents
Published / Last Updated on 21/01/2025
In the words of Mark Twain ‘buy land, they are not making anymore’. Great Britain is an island and with the population increasing, the demand for property and land is ever increasing forcing a housing crisis/shortage but also making UK property an attractive investment as UK property prices generally price as well as rental demand is high.
Why Buy in the UK?
- UK property is attractive as detailed above.
- May people may want a property in the UK as ‘bolt hole’ should things ‘go wrong’ where they are.
- Many expats living/working overseas may want to buy a UK property before they return to UK.
- Many retired expats may want a property for regular family visits/holidays etc.
- Secure property price rises for investment growth.
- Secure rental income due to high demand.
But,
- What are the mortgage options?
- What are the pitfalls?
Expat Mortgage Availability
When we first shot this video 10 years ago, there was limited expat and overseas buy-to-let mortgage availability. Brexit and the fact that financial services were not included in the Brexit Trade Agreement also forced many lenders to rethink their position on lending to EU residents or not. Happily, the expat mortgage market has developed since and there is now a healthy range of expat mortgages to choose from.
Lenders will seek/check:
- Your rights to live, work or buy in the UK including checking that you live in a territory that is not ‘blacklisted’ or has sanctions imposed by HM Government.
- Deposit of c25% of the purchase price.
- Suitable survey valuation for value and rental income potential.
- Your income less expenses to ensure affordability.
- ‘Rental cover’, usually that market rent is around 140% of any mortgage interest payments.
- Proof of identification for names and addresses.
Lenders
Some lenders will only offer expat mortgages to existing clients e.g., that have significant funds deposited with them e.g., minimum income equivalent c£100,000 and minimum savings held with the bank c£50,000 - £100,000.
Many lenders do take on new clients and may not have minimum separate savings held with them and will base lender on normal buy-to-let, 2nd home, holiday let or income/expenses criteria.
Watch out for:
- Survey fees and legal fees.
- Stamp Duty additional duties for 2nd homes (+5%) and overseas buyer surcharge (+2%) added to normal stamp duty rates.
- Service and maintenance fees e.g., on leasehold flats/apartments.
- Double council tax rates on 2nd home/holiday homes.
- Abolition of ‘furnished holiday let’ rules.
- UK self assessment income tax returns required.
- UK Capital Gains Tax when sell the property.
- UK Inheritance tax on death on UK held assets.
- UK Property Laws e.g., Fire Safety, Energy Efficiency requirements, the new Renters Rights Bill (should become law in 2025) giving tenants greater rights and limiting when landlords can evict tenants.
Overseas Buyer Stamp Duty Calculations – not to be ‘sniffed’ at.
|
Example 1, Purchase Price £250,000 |
Bought as Main Residence/1st Home |
Bought as Additional/2nd Property |
||
|
Purchase Price Band |
Rate % |
Stamp Duty Land Tax £ |
Rate % |
Stamp Duty Land Tax £ |
|
Up to £250,000 |
2% |
£5,000 |
7% |
£17,500 |
|
£250,001 to £925,000 |
7% |
£0 |
12% |
£0 |
|
£925,001 to £1,500,000 |
12% |
£0 |
17% |
£0 |
|
£1,500,001 + |
14% |
£0 |
19% |
£0 |
|
Totals |
|
£5,000 |
|
£17,500 |
|
Example 2, Purchase Price £500,000 |
Bought as Main Residence/1st Home |
Bought as Additional/2nd Property |
||
|
Purchase Price Band |
Rate % |
Stamp Duty Land Tax £ |
Rate % |
Stamp Duty Land Tax £ |
|
Up to £250,000 |
2% |
£5,000 |
7% |
£17,500 |
|
£250,001 to £925,000 |
7% |
£17,500 |
12% |
£30,000 |
|
£925,001 to £1,500,000 |
12% |
£0 |
17% |
£0 |
|
£1,500,001 + |
14% |
£0 |
19% |
£0 |
|
Totals |
|
£22,500 |
|
£47,500 |
Expat and overseas resident UK mortgages are available, but care must be taken to understand buying procedures, pros and cons, and of course additional costs outside purchase prices such as 2nd property and overseas buyer stamp duty levies.
