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How Much Does An Expat Mortgage Cost?
The main cost of an expat mortgage is the interest rate.
Read our full guide to expat mortgage rates to learn more about this.
But in this article, we'll look at the other expat mortgage fees and the broader costs of purchasing property back in the UK as an expat.
Find the Perfect Expat Mortgage
Fifteen Additional Expat Mortgage Costs
Getting a mortgage to buy a UK property from overseas as an expat gives you an opportunity to invest in the UK marketplace, or just to have somewhere to be whenever you come home - but it’s not without its complications.
The mortgage rate is not the only financial consideration for UK expats looking to buy property.
In fact, there is a potential flood of extra costs that can pile up.
Don’t be disheartened, though, at Clifton Property Finance, we’ve done the research and have the answers, meaning that if you consult with us, obtaining an expat mortgage is a smooth ride. To understand the additional expenses that may occur, here’s our guide to 15 additional expat mortgage costs:
1 - Stamp Duty Land Tax (SDLT)
Stamp duty is a significant concern for anyone buying a second property in the UK, whether you’re an expat or not, but there’s an additional cost for those purchasing from overseas. For properties in the UK and Northern Ireland, non-residents suffer NRSDLT - that’s non-resident stamp duty land tax which is 2% higher than standard stamp duty.
This means that buying in Carmarthenshire or on the borders of Loch Ness is that much cheaper - and you will enjoy some fantastic views!
2 - Valuation Fees
No matter where you live, you’ll be charged for a professional assessment of the property’s market value and really, there’s no surcharge for doing this from another country, but it does have to be taken into account.
3 - Legal Fees
Again, legal fees are something you’d have to consider if you were buying as a UK resident, but there may be an extra cost to this when purchasing property from abroad as extra steps do have to be taken with regards to legal due diligence.
Make sure you discuss the legal fees with your chosen conveyancer before signing an agreement.
4 - Broker Fees
At Clifton Private Finance, we work to find you the best expat mortgage rates, using our specialist knowledge of the UK mortgage landscape to determine the perfect mortgage product for you.
Many specialist lenders and international building societies won't accept direct applications and only work with brokers, so it can be difficult to compare your options without going through a broker.
We charge a fee for our work that varies depending on the complexity of your application. Get in touch for a quote and to find out how we can help you.
Find the Perfect Expat Mortgage
5 - Arrangement Fees
Some UK lender arrangement fees will involve an additional cost for expat mortgages, so it’s worth checking the details before going ahead, as the difference could save you thousands.
This is where a higher interest rate might still be a cheaper overall option if the alternatives come with sharp arrangement fees.
6 - Currency Exchange Costs
If you are working abroad then your salary is unlikely to be in good ol’ pounds sterling.
Converting foreign currency into GBP for a property purchase comes with both fees and the unwanted fluctuations of the exchange rate.
When you’re looking at a major purchase like a house, those little exchange rate percentages can have a significant impact so it’s important to plan and make your move accordingly.
At Clifton Private Finance, our expat mortgage team have all the knowledge you need to navigate the uncertainties of international money exchange and help you get the deals in your favour.
7 - Foreign Income Verification Costs
Your lender is going to need to verify your income and while that’s an easily-accomplished task with UK employers, it can be difficult internationally.
Often costs are incurred while your foreign income is verified, from translations to document notarisation. Thankfully, technology is ever-improving in this area, making these costs come down year after year.
8 - Survey Fees
When purchasing from abroad, a great deal of trust is going to be placed on your building survey, so it’s important not to scrimp on this essential report.
A comprehensive property survey does more than check for structural issues (although it does that, too) and will help make sure that you save on future costs. This additional expat mortgage fee may seem onerous but it’s a valuable investment.
9 - Bank Transfer Fees
Even when moving GBP to GBP, bank transfer fees will apply; this is ever-more relevant for international money transfers. Check the fees applicable to buy your property and take it into account when budgeting.
10 - Travel Expenses
Buying books, shoes, and rare collectibles on the internet is one thing, but committing to a property purchase without seeing what you’re getting is a lot more risky - you don’t want to end up with a house that looks like it came from Wish!
11 - Insurance
Insurance is another sector where underwriters love to increase the premiums for expats. You will find that both buildings and contents insurance comes with a higher price due to the perceived increased risk associated with the owner being a non-resident.
12 - Item Transportation and Storage Fees
Depending on your plans for the property, you may be moving personal possessions from one country to another, or simply looking to keep valuable furniture and other items safely stored during the transition period.
13 - Property Management Fees
Many expats look to purchase property in the UK as an investment will look to letting for ongoing income, and will need the input of a property management company.
As part of their service, the property management company will look after the tenant management and ongoing maintenance, but will charge a fee for their services.
14 - Ongoing Property Maintenance
Property maintenance is its own additional cost on top of the expat mortgage and funds should be set aside to cope with unexpected expenses of this nature.
If the property is let out, then the property management company fee will already be in place to cover the management of the maintenance, though this fee may be increased in the case of extensive of specialist repair requirements.
15 - Tax
A major expat mortgage cost consideration is that of tax. Depending on the property use, there will be tax considerations to be made in both the UK and the owner’s country of residence. These may include:
- Income tax on rental income - Non resident landlords must have basic rate tax deducted from the rental income and paid to HMRC, usually undertaken by the letting agent.
- Capital gains tax (CGT) - Expats selling on UK property are liable for UK CGT which must be paid within 30 days of the sale.
- Inheritance tax (IHT) - Should you wish to pass the property on to your family, it is important to consider inheritance tax.
- Council tax - Council tax will be levied on the property, which must be paid by either the tenant or the property owner, even if empty. Depending on the council, properties empty for longer than two years can face additional premiums, as can those used as holiday homes in certain locations.
Managing Your Expat Mortgage Costs with Clifton Private Finance
If our list seems overwhelming, don’t worry.
At Clifton Private Finance we work with expats every day to ensure they have a worry-free and smooth expat mortgage process and enjoy their investment throughout its life.
With experts in every aspect of additional expat mortgage costs, we will anticipate every possible expense, minimising costs and making sure your finance is the best it can be.
Speak to an expat mortgage specialist at Clifton Private Finance today.
