Remortgaging as a UK Expat: The Comprehensive Guide

If you’re living overseas, remortgaging as a UK expat, especially for British expats, comes with unique challenges related to living abroad. Remortgaging with a high street lender may not be the most cost-efficient route to take.

The UK property market offers unique opportunities and challenges for expats, and these can differ significantly from standard UK mortgages. Expats face additional challenges in securing loans due to account dormancy in their home country, limited lender options, and potential difficulties in validating self-employed income.

Remortgaging can unlock real benefits, but it pays to consider your options and get the right advice - especially if you’re currently a non-UK resident. The application process for expat remortgages involves additional steps and documentation compared to standard UK mortgages.

We’ll guide you through the opportunities that remortgaging can present and what you’ll need to have in place to unlock the best remortgage deals available from expat-friendly lenders.

Need to Remortgage as an Expat?

Table of Contents

Remortgaging a Property as a UK Expat: The Advantages

You Can't Remortgage with Your Current Lender

Many mortgage providers shy away from expat borrowers due to the perceived higher risks.

It’s common to find the lender you first buy a property with refuses to offer you a change of product to release equity or remortgage when they discover you’ve moved abroad.

In these cases, switching to a new lender who understands expat circumstances will improve your approval chances.

The only option in this scenario is to switch lenders.

You Want to Lock into Lower Rates

Perhaps the fixed-term mortgage agreement on your UK property is coming to an end, and you want to avoid paying the higher standard rates (SVR) offered by your current lender. Or you’re aware that current mortgage rates with another lender are lower than your existing rate, and you want to switch to make long-term savings.

Reviewing your loan term options can also help optimize your mortgage for your current needs, as flexible terms may be available for expats.

Your Mortgage Now Has a Lower Loan-to-Value Ratio (LTV)

If the value of your UK property has risen considerably, or perhaps you’ve paid a large sum of your mortgage off, you’re presented with a few different options.

Lenders will usually require a property valuation to determine the current property value and set the new loan-to-value (LTV) ratio, often aiming for 70-80%.

You might want to offset the improved LTV to lower your interest rates and monthly payments. Alternatively, you could keep your repayments the same but withdraw some equity to invest in another property and build your property portfolio.

After renovations, property values can increase by 10-15%, making remortgaging and additional borrowing attractive options for homeowners looking to improve their properties.

You Want to Rent Out Your UK Home While Living Abroad

Letting out your UK property while you’re abroad means switching from a residential mortgage to an expat buy-to-let mortgage.

Buy-to-let properties are specifically designed for homes purchased to rent out, and buy-to-let mortgages typically require larger deposits, often around 25-40% of the property value, compared to standard residential mortgages.

Lenders usually require that the rental income from a rental property covers 125-145% of the mortgage payments, providing a buffer for potential vacancies.

Many UK banks view expats as higher-risk borrowers, which can result in stricter eligibility criteria and higher interest rates for buy-to-let mortgages. Expat buy-to-let mortgages can be used to purchase UK property for investment purposes, allowing you to maximize returns when purchasing homes for rental income.

But getting a competitive deal to maximise your rental income while you’re overseas is possible. The most certain way to achieve this is by going through a dedicated expat mortgage broker.

You Want to Remortgage to Release Equity

Many expats are keen to either develop their property investment portfolio or buy a holiday home. Remortgaging an existing mortgage can provide extra funds for a property purchase or home improvements, allowing you to access equity for various purposes.

Equity release through a remortgage allows homeowners to unlock some of the value held in their property to fund renovations, investments, or family support without selling the property outright.

According to a 2023 survey by the UK Finance Association, there was a 15% increase in remortgaging applications for home renovations compared to the previous year, highlighting a growing trend of using property equity for improvements. There could be a number of scenarios:

• If you want to buy an additional UK property, either as an investment or as a holiday home, you may need to remortgage an existing buy-to-let mortgage to release the equity needed for the deposit or to borrow extra funds for home improvements. You’ll also need an additional expat mortgage to finance the new property.
• Or you may want to remortgage a current UK property to release equity to purchase a house overseas or to fund upgrades and refurbishments.

In both cases, you’ll need a lender who isn’t put off by your current expat status, and it’s best to go through a specialist mortgage advisor.

Case study: Our case study below details how we helped two expats remortgage their London buy-to-let to fund a house purchase in Thailand

You Want to Move Back into a UK Property That You’ve Been Renting Out

Getting a mortgage as an expat returning to the UK is notoriously difficult. Most lenders flat-out reject you if you haven’t had a UK address for the last three years.

If you want to remortgage a buy-to-let property you’re planning to move back into, you may find it difficult to find a good residential mortgage deal.

Foreign nationals and returning expats may face additional challenges due to their unique circumstances, making lender requirements even more stringent.

Again, this is where you need the expertise of an experienced expat mortgage broker who knows which lenders to approach on your behalf and ensure you avoid having to pay a large deposit and higher rates.

You Want the Option of Overpayments But Your Current Lender Won't Allow It

Generous lump-sum bonuses or a recent job promotion could put you in a good position to start paying off more of your mortgage.

Making regular mortgage overpayments can make a lot of financial sense. You can increase the equity you own in your property, lower your LTV, and become eligible for cheaper mortgage products in future.

The problem is that your existing mortgage terms may not allow you to make overpayments, or the terms may trigger early repayment charges if you overpay by too much.

In this type of scenario, it's always best to seek the advice of a specialist mortgage advisor to see if it's worth remortgaging or if your extra income could be put to work elsewhere.

How Easy Is It to Get an Expat Remortgage on a UK Property?

Expat remortgages on properties in the UK are easier to arrange than the process of applying for a brand new expat mortgage.

However, several factors influence the ease of obtaining an expat remortgage, including income, credit history, and country of residence.

While the standard remortgaging process involves similar procedures to regular refinancing, expats face unique challenges related to income assessment and stricter lending criteria.

Use a specialised mortgage broker experienced in helping expats navigate these requirements to improve your chances of approval.

There are three key factors a lender will consider:

1. UK Credit History

In most cases, if you already have a UK mortgage, you’ll have an up-to-date credit history which will make it much easier to find a remortgage deal at the best available rates.

It's best to maintain a UK bank account, use a UK credit card for regular purchases, and register on the electoral roll at a UK address to enhance your credit profile while living abroad.

When you don’t have a traceable UK credit score, or it’s less than perfect, that's when lenders become cautious.

Expats lacking a traceable UK credit score may need to provide additional proof of income and assets to secure favorable mortgage terms.

2. Your Income

If you or your partner are earning in foreign currency, this could present a problem when it comes to remortgaging.

Lenders assess foreign income, including income in Australian dollars, and may only recognize a portion of it due to currency fluctuations.

The risk of fluctuating currency rates can mean you’ll either be flatly refused or end up paying higher rates.

Lenders often apply 'shading' to foreign income, typically considering only 60-80% (sometimes as low as 50-80%) of your foreign currency earnings, which can significantly reduce your borrowing power.

Documentation for foreign income verification usually includes recent payslips, bank statements, employment contracts, and proof of visa status.

Non-resident tax rates, such as 32.5% in Australia, can also impact affordability assessments. If you’re earning in a major currency, it is less of an issue, while niche currencies can be a real obstacle.

It’s common for expats to earn bonuses and commissions and want to utilise overseas property or other investment vehicles to negotiate a remortgage deal.

Many lenders are cautious when it comes to unusual or complex income structures, and you may find it difficult to leverage all your assets without help from an expat mortgage specialist.

3. Where you live

Mortgage applications can often be turned down on the basis of where an expat is living in the world.

For obvious but sometimes more ambiguous reasons, certain countries such as Australia, South Africa, Nigeria, Kenya and even Singapore can be off the approved list for many lenders.

UK lenders have varying policies regarding expats and foreign nationals, which can affect eligibility depending on your country of residence.

If you think your application may be affected by any of the above scenarios, it would be wise to seek the advice of a specialist expat broker who has an in-depth knowledge of the expat mortgage market and will know exactly which lenders to approach on your behalf.

Case study: Read our case study below on how we secured a buy-to-let remortgage for a UK expat based in Japan

Your Checklist for a UK Expat Remortgage Application

The mortgage application process for expats involves preparing extensive documentation and understanding lender requirements.

Lenders often apply stricter criteria for expats, with Loan-to-Value (LTV) ratios typically capped at 70-80%, and you may require a larger deposit and face stricter affordability tests.

Many lenders view expat loans as higher risk, so being well-prepared is crucial.

It’s a good idea to get all the following documentation ready before you apply to remortgage a UK property from abroad, as these documents are essential for a successful application:

• Proof of identity and address
• Your employer's details (and sometimes a verification letter from your employer)
• Payslips from the past 3 to 6 months
• Detailed information regarding the property you want to buy
• An accurate estimate of the rental income you will receive from the property (if relevant)
• Your exit strategy (whether you'll live in or sell the property in the future)
• Accounts and tax returns certified by an internationally-recognised accountancy firm (if self-employed)

It saves time and money to use an experienced expat mortgage broker to package your application.

They will help you:

• Identify and approach the right lenders to suit your circumstances, so your application won't be turned down later by a surprise requirement
• Tell you exactly what type of documentation the lender requires and how it should be authenticated
• Verify your documents, so they don’t have to be sent to the lender (depending on the lender)
• Submit your complete application with all documentation and expedite approval through their contacts at the lender

Case study: Our case study below explains how we helped an expat in Dubai remortgage to purchase a home for their daughter

Remortgage Your UK Property from Abroad with a Specialist Expat Broker

At Clifton Private Finance, we can ensure your expat remortgaging process is as smooth as possible and keep down costs in the long term.

We help international clients from all over the world access a wide range of mortgage products, including options from specialist lenders that are tailored for British citizens living abroad.

There are additional complexities than with UK residents, but it will also be easier than going with a high street lender.

A lot of documentation needs to be produced, and providing lenders with exactly the information they want streamlines the process. Our expat mortgage experts can guide you through the process and get you the best terms for your circumstances.

Both traditional lenders and specialist lenders play a role in the expat mortgage market, offering diverse lending solutions.

We highly recommend that you seek expert advice based on the full range of market options available to ensure you get the best rates for your specific situation.

Call us on +44 203 900 4322 to discuss your requirements or book an appointment with one of our expert brokers.