UK Mortgage For Returning Expat

Podcast approved by The Openwork Partnership on 07/01/2025.

I’m moving back to the UK. Can I get a mortgage?

Yes, in theory there’s no reason why not. There are two ways you can do it. One is prior to your arrival back in the UK, and the other is once you’ve actually landed.

If you’re looking at doing it when you’re still away, as long as you’re returning within the next 6 months, there are lenders there that would allow that. If you waited until you actually arrived back in the UK and you were formerly a resident here, the number of lenders we could approach would be far higher. It’s worth exploring both options if you are considering a move back.

Is it more difficult to get a mortgage as an expat returning to the UK?

It’s slightly more complex than getting a standard UK resident mortgage, and there are a few things to bear in mind. Firstly, credit scoring is important. You need to make sure that you have enough of a credit footprint in the UK for lenders to make a decision.

The other side is income. If you’ve been overseas, what have you been doing for work?What’s your level of income, and is that going to continue when you’re back? You might be looking to get a new job – in which case there are usually minimum periods of employment.
If you’re self-employed, we need you to have two years worth of documents as a self-employed applicant. Again, if you’re seeking a mortgage before you arrive back in the UK, you’re limited on lenders, so you may not have as many options as if you wait until arrival.

How much deposit do I need for a mortgage in the UK as an expat?

For an expat with no plans to return home, generally speaking they need a bigger deposit. For the most part, that’s 25% and it needs to come from your own sources. If you’re returning to the UK, lenders will treat you as a UK resident and standard terms would apply – so you don’t have that larger deposit requirement.

Generally speaking, the more you’re borrowing, the larger the deposit lenders want because larger loans are higher risk for them. They want a more of a buffer between what you’re borrowing and what the property is worth. You can often get away with a 5% or 10% deposit, but if you borrow more than £1 million, you will need 15% with most lenders. Some may want 25%.

It all depends on what you’re doing. If you wanted an interest only mortgage or offset product, for example, some lenders might have a larger deposit requirement there. But that’s all standard – it’s nothing to do with you being an expat.

Can I apply for a mortgage before physically returning to the UK? Are there specific residency requirements?

You can apply before you’ve returned, as long as you’re coming back within the next six months. There’s no restriction there. If you’re applying with no intention to return, lenders do have restrictions. But if the plan is to be back in the next six months, they’ll ignore where you are now – it’s all focused on the situation once you’ve returned.

What can I do to improve my chances of getting a UK mortgage if I have been living abroad?

The main thing is to maintain a credit footprint in the UK, by having bank accounts open and registered in your name. You also need to keep everything registered at one address. You might have a family member whose address you can use for bank statements and even for the electoral roll. That’s going to make credit scoring a lot more straightforward for you.

There’s a potential concern that you wouldn’t have enough history in the UK over the last six years for lenders to base a decision on. It’s not poor credit, it’s just lack of credit. Managing to maintain a credit footprint will make life a lot easier.

Is it easier to qualify for a mortgage if I already have a credit footprint like a bank account, credit card or loan in the UK?

It is, yes. If you’ve lived in the UK and then you go away, it’s unlikely you’ll close down every bank account. There’s no great advantage to doing that, so you might as well leave it running. With loans and credit cards, charges would apply – so you might not want to have them running, but a bank account is straightforward and will give you a better chance at a mortgage when you return.

How long do I need to have lived back in the UK to get a mortgage?

There is no minimum period. It all comes down to the lender. Some will potentially offer you a mortgage if you’re returning within the next six months. Some would look at offering a mortgage from day one of return, while others have minimum residency requirements of two or three years – but those are in the minority.

There are plenty of High Street banks that would consider an application from day one. You should have plenty of options as soon as you return and a couple if you’re still away.

What if I have bad credit as a returning expat? Can I get a mortgage?

It all comes down to what you consider bad credit, and which lenders we can potentially go to. Any blips on your credit file will stay there for six years, but the further those incidents are in the past, the better chance you’ve got of securing a mortgage.

Each lender has a black and white policy on what they will and won’t accept. It might be no CCJs or defaults in the last six months, 12 months or 36 months. With others it comes down to credit scoring. The further in the past any bad credit issues are, the less impact they have on the lenders’ scoring.

Each one has its own scoring system that will weight things differently. A score from a specific agency like Experian, for example, doesn’t directly correlate to what a lender uses to make its assessment.

The only way to find out whether a lender will accept you is to run a Decision in Principle, where they do a credit search and they say yes or no as to whether they will lend to you, and how much. You might be declined for one Loan to Value and approved at another.

Loan to Value is the amount you’re borrowing versus the property’s value. So putting in a larger deposit might increase your chances of getting a mortgage. There are also specialist lenders that focus on people who have had credit issues in the past, so there are usually options there.

It helps if we can explain the cause. We often see people who have moved addresses, especially when going abroad, and they forget to close a utility account and a debt builds up over time. They’re posting letters to an old address.

That’s explainable – you didn’t know it was there, and ideally, when you found out about it, you cleared the debt. That obviously looks better than bad credit where you’re missing payments and going into default. With credit issues, it’s always worth speaking to a broker to point you in the right direction.

I’m a self-employed expat moving back to the UK, can I get a mortgage?

Yes. If you’re self-employed overseas and you move back to the UK, some lenders will accept that income and some won’t.

If the plan is to maintain that work going forward, the lender will want to check that it’s feasible to do it from another country. They’ll want to see income documents from the last couple of years.

If the plan is to come back to the UK and start a new self-employed role, it’s unlikely you’ll be able to use that past income. Most lenders want you to have been doing your current job for at least two years and have two years worth of tax documents as evidence.

There are some exceptions to that. If you’re a qualified professional like a lawyer, doctor, a dentist and you’re going in as a partner of an existing firm, it may be easier. Technically, you’d be self-employed because you’re a partner, but some lenders will look at the minimum income you will draw from that LLP. You won’t necessarily need two years of records.

What if I’m retired? Can I get a mortgage if I’m moving back to the UK?

As long as you’ve got retirement income like a pension that you can evidence, and it fits the affordability model of the lender, there’s no reason why you can’t get a mortgage. The main issue we find with retired applicants is the maximum term a lender will go to because of age. If there are restrictions on how long you can take the mortgage for, you might find that the affordability is a lot tighter.

A lender might say you’ve got to repay the mortgage over a shorter period – of perhaps 10 years rather than 25 or 40 years. It means the monthly payments will be that much more and you might need higher incomes to sustain those payments.

Can you get a UK mortgage if you still have an overseas income, but want to move back to the UK?

Yes, and we do plenty of these applications, where someone has a job overseas that they will continue doing back in the UK.

Lenders have different requirements around foreign currency. If you’re paid in U.S. dollars or Australian dollars, for example, some lenders accept that and some don’t. We will focus on the lenders that will use that income and check how that is treated. Some will take a certain percentage as a ‘haircut’ to account for currency fluctuations. They might just use 75% of your income, for example.

Your earnings could come from employment or self-employment, or it could be pension income. We just focus on lenders we know will accept it and then assess how much you can borrow.

What happens if I’m moving back to the UK, but don’t have immediate employment?

Unless you can evidence some form of income, you’re basically not going to get a mortgage. The lenders need confirmation that the loan is affordable so you can pay it back. They can always repossess the property to get their money, but they also have a duty of care to you as the borrower to make sure that doesn’t happen.

If you’re moving back and you get a job offer that’s starting in 2-3 months, some lenders will accept that. You don’t necessarily need to have started the job – an offer letter with a confirmed start date will be enough. Some lenders will accept that income up to three months before the job starts.

How can a mortgage broker help here? Have you got anything else to add?

It’s always useful to speak to someone when you take out a mortgage – even if you’re a very simple case. We can look at the rates for you across the market and we handle the admin side of the application for you – there’s always value there.

For a returning expat there are lots of moving parts and a level of complexity that make it very helpful to work with someone who knows what they’re doing. We will reach out to the lenders so you’re not wasting your time making applications to one that just won’t accept it.
Finding a lender on your own would take days of trial and error. Just speak to someone who knows which lenders to use, how much of your income they would take, what you can buy and what their terms will be. It’s going to save you so much time.

It also helps with credit scoring. If you’re constantly running hard credit searches with lenders that won’t accept you, you could just destroy your credit profile. That’s completely unnecessary – just speak to a broker.

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

Approved by The Openwork Partnership on 07/01/2025.