Proving income and affordability are main expat mortgage challenges, say brokers
Brokers have cited proof of income and affordability checks through overseas tax returns and payslips as the biggest hurdles to sourcing products for expat borrowers.
Research from Suffolk Building Society found that 62% of broker respondents agreed this was their main challenge when placing expat mortgage cases.
Further, 48% named concerns about global political instability, uncertainty over lending criteria and identity and anti-money laundering (AML) checks as the next-most common challenges.
The mutual gathered insight on brokers’ sentiments toward expat borrowing and found that advisers believed only 34% of expat clients knew they needed a dedicated expat mortgage.
Charlotte Grimshaw, head of intermediaries at Suffolk Building Society, said: “There’s a widely understood idea of what an expat looks like, perhaps a lawyer or finance professional who has moved to Dubai. But the reality is much broader. Those working for a UK company but based overseas, and under their local tax jurisdiction, would count as an expat. As might someone working on an oil rig, in shipping, or as crew, or at the UK overseas embassy, which can be a surprise if they’re new to living or working overseas.
“Given the complexities of an expat mortgage, and the fact that many prospective borrowers are unaware that they require one, Suffolk Building Society believes there is a clear case for the value of broker advice. Intermediaries have a vital role to play in helping clients understand their options, identifying the right mortgage for their circumstances and navigating the additional requirements involved.”
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The value of a broker
Suffolk Building Society queried advisers on where they felt they added the most value in expat cases, and the majority – 88% – cited their ability to find a lender willing to lend to a borrower based on their individual circumstances, such as their country of residence, tax status and the currency they are paid in.
The next-most common response was explaining the type of expat mortgage a borrower needs, as cited by 54% of advisers.
A further 44% of advisers said they added value by explaining the documentation required and helping clients understand why the expat mortgage process might be more complex than a standard UK application.
Grimshaw added that even when clients did know they would need an expat mortgage, understanding which product was most suitable was not always straightforward.
She added: “Whether they plan to let the property permanently, use it themselves when visiting the UK with flexibility around letting, or it’s to be a home for themselves/family members, this all influences the type of mortgage they may need. For example, we’ve had brokers come to us looking for a buy to let, but after talking through the case, their clients have opted for the added flexibility that a holiday let can bring.
“A broker’s understanding of the customer’s wider circumstances, combined with our knowledge of expat lending, means we can work together to provide a robust solution for expats across the world.”
Grimshaw said expat lending was a “great example of where broker advice makes a significant difference”.
She added: “While rate, loan to value and income multiples may be the core considerations when dealing with a standard residential case, the value that brokers add to an expat case goes far beyond these. It’s not simply about navigating what can be a more complex application process and documentation requirements. It’s about identifying the right type of mortgage, anticipating potential obstacles and directing the case towards an appropriate lender from the outset.”
