Mortgages for Foreign Income

Can I get a UK mortgage based on foreign currency?

Yes. Despite the obvious difficulties that you can imagine, it is possible to get a mortgage when you earn your living from a foreign currency. There are stricter criteria involved, depending on the lender, but yes, it is possible.

Why can it be difficult to get a UK mortgage on overseas income?

Lenders are a wary bunch, particularly since the last recession. They are cautious about applications from overseas income, mainly because of currency fluctuations and how that might affect the person’s ability to repay the debt.

An example might be if the economy of that country in question were to crash and the value of their currency were to plummet against the pound. That could result in the mortgage becoming a lot less affordable.

Do many lenders accept foreign income?

No, for the reasons I mentioned before, most lenders will shy away from it. The ones I know have certain restrictions – here in Northern Ireland about five lenders will consider it. Another handful of lenders in the rest of the UK will accept foreign currency income.

Do I need to declare my foreign income?

With any mortgage application, any income that’s being used for mortgage affordability has to be declared – it doesn’t matter what currency it’s in. That way, the lender can make an informed decision about whether or not it meets their lending criteria.

So any income you’re going to use, whether it’s Japanese yen or euros or US dollars, it needs to be declared if you’re going to be using it.

Can you get a UK mortgage if you work abroad and have foreign income?

Yes, as long as you’re resident in the UK and have a UK address history. It also helps if you’ve got a credit history in the UK. Some lenders will accept credit reports from the country where you were previously a resident. But having an address here is the key thing.

Which currencies are accepted by UK lenders?

This is by no means exhaustive, but some lenders only accept a handful of currencies – the major ones like euros, US dollars, Swiss francs and United Arab Emirates currency. Other lenders have a wider scope. Natwest, for example, will accept all of those plus Bulgarian, Norwegian, Japanese, Australian and Canadian currencies – and more.

They have to be approved countries but it should be okay to apply for any of the above.

Are there any common foreign currencies that aren’t accepted by UK lenders?

Some currencies are from countries that are blocked by the UK in general, not just for mortgage purposes. They’ll obviously not be accepted by a mortgage lender.

These tend to be currencies from nations that are economically unstable – North Korea and Angola, for example. These countries’ exchange rates are too unpredictable and high risk for mortgage lenders so they’ll typically avoid applications from people paid in those currencies.

What if it’s a joint mortgage and only one of us has foreign income?

This will usually be okay, but the same restrictions will apply as if both people were paid in foreign currency. Even if one person is paid in pounds sterling, because one of the joint borrowers’ income is in a foreign currency, the lender’s restrictions will apply.

What if I’m self-employed and paid in foreign currency?

This relates back to our own experience, where a lot of people are paid in euros because they work in the Republic of Ireland. This is fairly straightforward, in the sense that the Irish tax system is quite similar to that of the UK. So as long as the tax calculations and the evidence that the tax has been paid can be provided, it’s usually okay.

With other currencies there are countries with quite a different tax system to the UK, which can make it a bit trickier.

What if I have bad credit?

It will depend on how bad your credit is, what the lender will accept and their criteria around missed payments and credit score.

The difficulty is that we won’t have the option to use the usual lenders for people with impaired credit like Kensington, Accord or Virgin Money. They don’t do euro income or any other foreign currency income at all. It’s solely UK based – so you will need to have decent credit if your income is in a foreign currency.

What kind of deposit should I have if I’m paid in foreign income?

Lenders will typically require a higher minimum deposit for applicants with foreign income. Progressive Building Society, based here Northern Ireland, will for example ask for a 10% minimum deposit for euro income, rather than the 5% minimum for standard purchase applications. This is to protect themselves against potential currency fluctuations.

Other lenders are more restrictive. Some of them may have a minimum of 15% or 20% with certain currencies. If you’re paid in another currency, you won’t be able to get a 5% deposit, 95% Loan to Value mortgage.

Does it make a difference if I am a First Time Buyer and paid in foreign currency?

No, the same criteria applies whether the applicants are First Time Buyers or they already own a property. Lenders don’t really make a distinction in that regard when it comes to foreign income. Any normal restrictions that apply to First Time Buyers will still apply.

What if I want to purchase the property as a Buy to Let?

It’s possible, but even more restrictive in terms of lender choice. Some lenders, even if they do accept foreign income, don’t do Buy to Let at all.

By default, a foreign income will reduce the options for Buy to Let mortgages. With the lenders that do offer this type of mortgage, the same rules apply in terms of the minimum deposit, which is 25%. They’d have the same checks on income as for a normal Buy to let mortgage.

Should I try the lender that I have my bank account with first?

If they are one of the lenders that permit applications with foreign income, yes, although most people wouldn’t necessarily have that knowledge. We would suggest that you get in touch with an experienced mortgage advisor, as we would know straight away if your bank will accept such an application.

On top of that, we would know if there are better options out there. Maybe the interest rates are more favourable with other lenders – we would guide you as appropriate.

How long does the application process take if you are paid in a foreign income?

It’s no different to a normal mortgage application. Delays might occur if there are any difficulties – such as getting self-employed income evidence from foreign jurisdictions. But generally speaking, with most of our enquiries from the Republic of Ireland it’s not difficult. The documents involved are the same as here.

If the client is employed and their pay slips are easily attainable, there shouldn’t really be a difference in the timescale of the application process.

Have you helped many clients with foreign income?

Given the location of our business here in Northern Ireland, we have many applicants who work over the border in the Republic and are paid in euros. We also have a lot of people who are relocating from the Republic to the north.

Their income obviously remains in euros because they’re still working for southern based companies. We’ve been able to help the majority of these clients to secure mortgages with Alexa, Progressive, HSBC and Santander.

What are the benefits of using a mortgage broker? Should I speak to a broker before making an offer?

Having to navigate this yourself would be extremely time consuming – even with the restricted number of lenders you would have to spend a lot of time to find out if they might accept your situation.

An experienced broker with the criteria knowledge will find the right mortgage deal for you, whatever currency your income is in. If it’s possible to get a mortgage, we should be able to do it for you.

Or, if the circumstances mean you can’t do it at this particular time we can advise you on the steps to take to get ready in the future.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS

The information contained within was correct at the time of publication but is subject to change.