5 Things British Expats Should Check Before Remortgaging
What should British expats check before remortgaging a UK property?
Before remortgaging a UK property while living overseas, it is worth checking your existing mortgage, current property position, overseas income, future plans and documentation. Your circumstances may have changed since you originally arranged the mortgage, and living overseas can introduce additional considerations around income, currency and lender criteria. Preparing early can help you understand your options before your existing mortgage arrangements need to change.
Why should expats check their position before remortgaging?
Remortgaging is not simply a case of finding another mortgage to replace your existing one.
For a British expat, your circumstances may have changed significantly since your current mortgage was arranged. You may now live in a different country, earn your income in another currency, have different financial commitments or have changed your plans for the property.
Lenders also have different criteria for applicants living overseas.
The Giraffe Private Finance article guide specifically identifies remortgaging as a core part of its expat mortgage content and recommends considering factors including residency, income, income currency, UK property, affordability, documentation, existing borrowing and future plans.
Here are five important areas to check.
1. Check your existing mortgage and any early repayment costs
Start by understanding exactly where you stand with your current mortgage.
Check:
- Your outstanding mortgage balance
- Your current mortgage type
- When your existing deal ends
- The remaining mortgage term
- Any early repayment charges
- Any other fees associated with changing your mortgage
- Whether there are restrictions on making changes before the current deal ends
The precise terms will depend on your existing mortgage.
If there are costs associated with leaving your current arrangement early, these need to be considered when assessing whether remortgaging is appropriate and when it may make sense to do so.
It is also useful to understand whether you are simply looking to replace the existing mortgage or whether your requirements have changed.
For example, you may now want to:
- Borrow more
- Reduce the mortgage
- Change the mortgage term
- Change the repayment structure
- Review an interest-only arrangement
- Change how the property is used
These changes can affect the type of mortgage you need.
2. Check your current property value and equity
Your property may be worth a different amount now than when you originally arranged your mortgage.
Understanding the relationship between the property's current value and the outstanding mortgage is therefore useful when considering a remortgage.
For example, you may have built up equity through:
- Repaying part of the mortgage
- Changes in the property's value
- Making a larger initial deposit
- A combination of these factors
The amount of equity you have can be relevant to the mortgage options available, but you should not assume that an estimated property value will necessarily match the lender's valuation.
If you are considering raising additional funds, remember that this increases the amount you borrow and therefore your overall mortgage debt.
3. Check how your overseas income is likely to be assessed
This is particularly important for British expats.
When you originally arranged your mortgage, you may have been living and working in the UK. You may now be employed overseas and paid in a foreign currency.
For example, your income might now be in:
- Euros
- US dollars
- Swiss francs
- UAE dirhams
- Another overseas currency
Lenders can have different approaches to overseas income and foreign currency earnings.
Your current circumstances may therefore need to be assessed differently from when your existing mortgage was arranged.
It is useful to have clear information about:
- Your current employer
- Employment status
- Salary
- Income currency
- Length of employment
- Variable income where relevant
- Existing financial commitments
Currency is an important consideration because your mortgage is normally denominated in pounds while your income may not be. Exchange-rate movements can affect the sterling value of overseas income.
The GPF compliance guidance specifically identifies currency and overseas residency as areas requiring particular care in mortgage content.
4. Check whether your plans for the property have changed
Your intended use of the property is important when considering a remortgage.
You may have originally bought the property as your home but now live overseas and rent it out.
Alternatively, you may have originally intended to return to the UK but now expect to remain overseas for longer.
Your plans could include:
- Returning to the UK and living in the property
- Continuing to rent the property out
- Purchasing another UK property
- Building a larger property portfolio
- Raising additional funds
- Refinancing an investment property
A change in circumstances does not automatically mean that remortgaging will be difficult, but it can affect the type of mortgage required and the lending options that may be available.
If the property's use has changed since the existing mortgage was arranged, it is particularly important to make sure the current mortgage arrangements and proposed new mortgage are appropriate for the intended use.
5. Check that your documents are up to date
Overseas mortgage applications can require detailed documentation.
Before starting the remortgage process, it is useful to have your key information readily available.
This may include:
- Passport or identification
- Evidence of overseas address
- Residency information
- Recent payslips
- Employment information
- Bank statements
- Evidence of savings or equity
- Current mortgage statements
- Details of other borrowing
- Rental income information where relevant
- Property information
The exact requirements vary between lenders and individual circumstances.
If your income is from overseas, make sure you have clear evidence showing where it comes from and the currency in which you are paid.
Being organised with documentation can help reduce avoidable delays later in the process.
What else should expats consider before remortgaging?
The five checks above cover the main areas, but there are several wider considerations.
Has your financial position changed?
You may now have additional mortgages, loans or other commitments that were not present when your original mortgage was arranged.
These can form part of the assessment of any new borrowing.
Have you moved country?
If you have changed your country of residence since taking out your existing mortgage, this may be relevant because lenders can have different approaches to applicants living in different countries.
Are you looking to raise additional funds?
If you want to release equity, consider why you are borrowing more and how the additional borrowing fits into your wider financial position.
Are you considering interest-only borrowing?
If you are considering changing to or retaining an interest-only structure, the outstanding capital will still need to be repaid. A credible repayment strategy is therefore an important consideration.
Are you planning another property purchase?
If you intend to use equity from your existing property to help purchase another UK property, it can be useful to consider both transactions together rather than treating them as completely separate decisions.
Should you wait until your existing mortgage ends?
There is no single answer that applies to every borrower.
The timing of a remortgage can depend on the terms of your existing mortgage, any applicable costs, your circumstances and the mortgage options available at the time.
It can be useful to start understanding your position before the existing arrangement reaches its end date rather than leaving everything until the last minute.
This is particularly relevant for expats because overseas income and documentation may require additional consideration.
What if your circumstances have changed since your last mortgage?
This is common for expatriates.
You may have:
- Changed employer
- Moved country
- Changed income currency
- Increased your income
- Taken on additional borrowing
- Bought other properties
- Started renting out your UK property
- Changed your plans to return to the UK
A change does not automatically mean that a remortgage is unavailable.
However, it means your current circumstances need to be considered rather than relying on the assumptions used for your previous mortgage.
What should you do next?
Before considering a remortgage, it can be useful to prepare a simple overview of your current position:
- Check your existing mortgage balance and terms.
- Find out whether any early repayment charges or other costs apply.
- Review your property's current value and available equity.
- Prepare details of your overseas income and income currency.
- Review your existing borrowing and financial commitments.
- Be clear about how you intend to use the property.
- Gather your identification, income and financial documents.
Once you have this information, you can start to understand what mortgage options may be available based on your circumstances.
How Giraffe Private Finance can help
Remortgaging from overseas can involve additional considerations around income, currency, residency, property use and lender criteria.
Giraffe Private Finance specialises in UK mortgages for British expatriates and can help you understand the factors lenders may consider when reviewing your remortgage requirements.
If you are considering remortgaging a UK property while living overseas, you can contact Giraffe Private Finance to discuss your circumstances.
About the adviser
Kathryn — Mortgage Adviser, Giraffe Private Finance
Kathryn has 11 years' experience as a mortgage adviser and holds DipFA and Cert CII (MP) qualifications. Giraffe Private Finance is a UK mortgage brokerage specialising in mortgages on UK property for British expatriates.
Important: Mortgage lending criteria vary between lenders and individual circumstances. This article is for general information and does not constitute personalised mortgage advice. Any mortgage application is subject to lender assessment, affordability checks, property valuation and the relevant lender's criteria. Mortgage rates, affordability and lender criteria can change over time.
What to do if you have become an Accidental Landlord
What should British expats do if they have unexpectedly become landlords of a UK property?
An accidental landlord is someone who becomes a landlord without originally intending to build a rental property investment. This is common among British expats who move overseas and decide to rent out their former UK home rather than sell it. If this applies to you, it is important to review your existing mortgage, check that the property's intended use is permitted, understand your current financial position and consider whether a different mortgage arrangement may be appropriate.
How do you become an accidental landlord?
You may not have set out to become a property investor at all.
Perhaps you owned a UK home and then accepted a job overseas. Instead of selling the property before moving, you decided to rent it out.
Or you may have moved abroad temporarily, expecting to return to the UK, but your plans have changed.
Other situations can include:
- Moving overseas for work
- Relocating permanently
- Moving in with a partner
- Inheriting a property
- Keeping a former home while buying another property
- Deciding to rent out a property that was originally intended for personal use
The important point is that your original reason for buying the property may be different from how it is being used today.
That can have implications for your mortgage and wider financial planning.
1. Check your existing mortgage
The first thing to establish is how your current mortgage relates to the property's new use.
If you originally took out a residential mortgage because you intended to live in the property, you should check the terms of that mortgage before renting the property out.
Do not assume that because you are now living overseas, you can simply start renting the property without checking the mortgage arrangements.
Depending on your circumstances, you may need to discuss the change with your existing lender and establish whether the current arrangement remains appropriate or whether a different mortgage solution needs to be considered.
The precise requirements can vary between lenders.
2. Understand why you are keeping the property
Before making any decisions about the mortgage, think about why you are retaining the UK property.
You might be:
- Planning to return to the UK
- Unsure how long you will remain overseas
- Keeping the property as a long-term investment
- Waiting for a more suitable time to sell
- Keeping the property for family reasons
Your plans can affect how you think about the mortgage.
For example, someone expecting to return to the UK in a few years may have very different objectives from someone who has decided to remain overseas permanently and build a UK rental portfolio.
There is no universally correct decision. The important thing is to understand what you are trying to achieve.
3. Check whether the property is suitable for letting
If you are going to become a landlord, you need to consider more than the mortgage.
The property needs to be suitable for the intended rental arrangement, and there may be practical, legal and regulatory considerations depending on the property and where it is located.
These matters can change over time and vary according to circumstances.
Mortgage advice does not cover the full range of landlord obligations, so it is sensible to obtain appropriate legal, tax and property-management advice where required.
4. Review your mortgage affordability
Your financial circumstances may have changed since you first bought the property.
You may now be earning your salary overseas rather than in the UK.
Your income could be paid in euros, US dollars, Swiss francs, UAE dirhams or another currency.
For an expat, lenders may consider:
- Where you live
- Your employment
- Your income
- Your income currency
- Existing borrowing
- Rental income
- The property itself
- Your wider financial circumstances
Lenders have different approaches to overseas applicants and foreign currency income.
This means that the mortgage assessment may not simply be a repeat of the assessment you received when you originally bought the property.
5. Understand the rental income
Once the property is being rented, the rental income becomes an important part of the overall financial picture.
You should have a realistic understanding of:
- Expected rental income
- Mortgage payments
- Property management costs
- Maintenance
- Insurance
- Potential periods without a tenant
- Other property-related costs
Rent received from a property is not the same as profit.
This is particularly important for an overseas landlord because managing the property from another country may involve additional costs.
6. Decide how the property will be managed
Managing a UK rental property from overseas can be more complicated than managing one locally.
You may need to consider who will deal with:
- Tenants
- Maintenance
- Repairs
- Inspections
- Cleaning where relevant
- Emergencies
- Rent collection
- General property administration
Some landlords choose to use a professional letting or property management service.
That can make managing the property from overseas easier, but the cost of management needs to be included in your overall financial planning.
7. Consider whether you need to remortgage
Becoming an accidental landlord does not automatically mean that you need to remortgage.
However, if your existing mortgage no longer fits your circumstances or intended use of the property, it may be appropriate to explore the options available.
A remortgage could also become relevant if:
- Your current mortgage deal is coming to an end
- You want to raise additional funds
- Your circumstances have changed
- You want to review the structure of your borrowing
- You are considering purchasing another UK property
Any new mortgage application would be subject to the lender's criteria and assessment.
8. Think about your longer-term plans
An accidental landlord situation can sometimes become a long-term investment almost by accident.
You may initially intend to rent your property for only a year or two while living overseas.
Several years later, you may find that you now own a UK rental property and are considering buying another.
At that point, your circumstances may have changed significantly.
You might now be:
- A landlord with an established property
- Considering a second investment
- Building a portfolio
- Planning to return to the UK
- Considering selling the property
- Looking to raise equity
Reviewing your plans periodically can help you avoid allowing an accidental investment to develop without a clear strategy.
9. Check your existing and future borrowing
If you are planning to buy a home overseas or another property in the UK, remember that your existing UK mortgage remains part of your wider financial position.
Similarly, if you later decide to purchase another UK property, lenders may consider the existing rental property and mortgage alongside the proposed new borrowing.
For an expat, this can become increasingly important as your property interests grow.
The Giraffe Private Finance ideal client profile includes British expatriates looking to purchase, remortgage or refinance both residential and buy-to-let UK property, including clients who may be building longer-term relationships around future borrowing.
10. Organise your documents
If you need to review your mortgage or apply for new borrowing, having your documentation ready can make the process easier.
Depending on your circumstances, this may include:
- Passport or identification
- Evidence of overseas address
- Residency information
- Employment details
- Recent payslips
- Bank statements
- Current mortgage statement
- Evidence of rental income
- Details of other UK properties
- Details of other borrowing
The precise requirements vary between lenders.
If your income is overseas, it is particularly useful to have clear evidence showing the source and currency of your income.
What about tax and legal responsibilities?
Becoming an accidental landlord while living overseas can raise tax and legal questions.
These can depend on factors such as where you live, your circumstances, the property and how it is rented.
The rules can also change.
Tax and legal advice is outside the scope of mortgage advice, so you should obtain appropriate professional advice rather than relying on a mortgage article to determine your obligations.
From a mortgage perspective, the important point is to make sure the intended use of the property and your mortgage arrangements are properly considered.
What are the potential risks of being an accidental landlord?
Keeping your former home can have advantages, but it also means taking on the responsibilities and risks associated with being a landlord.
These can include:
Rental income can change
A property may not always be occupied, and rental income can change over time.
Property costs continue
Mortgage payments and other costs do not necessarily stop when the property is vacant.
Managing the property from overseas
Living abroad can make dealing with tenants and maintenance more difficult.
Your circumstances may change
You may change country, employer, income or plans to return to the UK.
The property may affect future borrowing
An existing mortgage and rental property can form part of the wider assessment when you apply for additional finance.
None of these points necessarily means that keeping the property is the wrong decision. They simply need to be considered as part of the overall picture.
What should you do if you have already moved overseas?
If you are already living abroad and have decided to rent out your former UK home, it can be useful to work through the following steps:
- Check your existing mortgage arrangements.
- Confirm that the intended use of the property is properly addressed.
- Review your current income and financial commitments.
- Understand the realistic rental income and ongoing costs.
- Decide how the property will be managed from overseas.
- Review your longer-term plans for the property.
- Organise your mortgage and property documentation.
- Obtain appropriate tax and legal advice where necessary.
- Consider whether your existing mortgage remains suitable as your circumstances develop.
The aim is not necessarily to change your mortgage immediately. It is to understand your position and make sure your arrangements reflect your current circumstances.
What if you want to buy another UK property?
This is a common point at which an accidental landlord situation becomes more significant.
You may have started with one former home that you decided to rent out. Later, you may want to buy another UK property, perhaps because you plan to return to Britain or because you want to purchase another investment.
At that point, your existing property and mortgage become part of the wider financial assessment.
Your rental income, existing borrowing, property value and overseas income may all be relevant.
This is why it can be useful to review your overall position before committing to another purchase.
Kathryn's Insight
“Accidental landlords often did not set out to become property investors. The important thing is to step back and review the situation once your circumstances have changed, rather than simply continuing with the arrangements you had when you originally lived in the property.”
How Giraffe Private Finance can help
Becoming an accidental landlord while living overseas can leave you with questions about your existing mortgage, future borrowing and how the property fits into your longer-term plans.
Giraffe Private Finance specialises in UK mortgages for British expatriates and can help you understand the mortgage factors lenders may consider based on your current circumstances, income and UK property.
If you are an accidental landlord and want to understand your mortgage options, you can contact Giraffe Private Finance to discuss your circumstances.
About the adviser
Kathryn — Mortgage Adviser, Giraffe Private Finance
Kathryn has 11 years' experience as a mortgage adviser and holds DipFA and Cert CII (MP) qualifications. Giraffe Private Finance is a UK mortgage brokerage specialising in mortgages on UK property for British expatriates.
Important: Mortgage lending criteria vary between lenders and individual circumstances. This article is for general information and does not constitute personalised mortgage advice. Any mortgage application is subject to lender assessment, affordability checks, property requirements and the relevant lender's criteria. Tax and legal matters are not covered in detail and should be discussed with appropriately qualified professionals.
Keep a Footing in the UK whilst living abroad
Wherever life takes you, it’s good to have somewhere that still feels like home.
Moving overseas does not necessarily mean losing your connection with the UK. Many British expatriates choose to retain a UK property, purchase a home for their eventual return, or keep a property available for family use while they are abroad.
However, keeping a financial and property connection with the UK can have mortgage and affordability implications. Your overseas income, currency, existing commitments and intended use of the property can all affect the mortgage options available.
Why do British expats want to keep a footing in the UK?
There are many reasons why someone living overseas may want to maintain a connection with the UK.
You might be working abroad for a fixed-term assignment but expect to return eventually. You may want a UK home ready for retirement, a property for your family to use, or simply want to maintain a base in Britain.
For some expatriates, buying or retaining a UK property can provide a sense of continuity while living overseas.
The important point is that your reasons for keeping a UK property can influence the type of mortgage and property arrangement that may be appropriate.
Keeping an existing UK property
If you already own a UK property when you move overseas, you may decide to keep it rather than sell.
There can be several reasons for doing this:
- You expect to return to the UK in the future
- You want a home available for your family
- You intend to use the property yourself when visiting Britain
- You are considering renting it out
- You want to retain an existing UK asset
However, moving overseas can change the circumstances under which your existing mortgage is held.
If you intend to change how the property is used, particularly if you plan to rent it to tenants, it is important to check that your mortgage arrangements are appropriate before doing so.
Buying a UK property while living overseas
Some British expatriates decide to buy a UK property after they have already moved abroad.
This might be because they are planning to return to Britain in the future or want to secure a property before moving back.
A residential UK mortgage can potentially be available to British citizens living overseas, but not every lender accepts applications from every country.
The lender may consider:
- Your country of residence
- Your employment
- Your income and currency
- Your deposit
- The property
- Your existing financial commitments
- How you intend to use the property
Lender criteria vary, so the fact that one British expat can obtain a particular mortgage does not mean the same option will be available to another.
Could you buy a home for your return to the UK?
Potentially.
Some expatriates purchase a UK home before they actually return.
This could make sense where there is a clear future plan to relocate, retire or move the family back to Britain.
However, you need to be clear about the intended use of the property when arranging the mortgage.
A property that you intend to occupy when you return is different from a property that you purchase primarily as an investment and rent to tenants.
The mortgage needs to be appropriate for the way the property will actually be used.
What if family members use the property?
Another reason British expats maintain a UK property is to provide somewhere for family members to stay or potentially live.
For example, your children may remain in the UK while you work overseas, or you may want a UK base that the family can use during visits.
This can raise questions about how the property is occupied and what type of mortgage is appropriate.
It is therefore important to explain the intended use of the property when discussing your mortgage options rather than assuming that a standard residential or buy-to-let arrangement will automatically be suitable.
What if you want to rent the property out?
Renting your UK property while living overseas is a common consideration.
If you intend to rent the property to tenants, you need to make sure that your mortgage arrangements permit the intended use.
Depending on your circumstances, a buy-to-let mortgage may be more appropriate than a residential mortgage.
If you already have a residential mortgage and your plans change after moving overseas, you should discuss the situation with your mortgage provider or adviser before allowing tenants to move in.
The important principle is that your mortgage should reflect the actual use of the property.
How does overseas income affect your mortgage?
If you are living abroad, your income may be earned in a currency other than pounds sterling.
For example, you might receive your salary in:
- Euros
- US dollars
- UAE dirhams
- Australian dollars
- Singapore dollars
- Another local currency
Some lenders consider overseas income, but the way foreign currency income is assessed can vary.
Your country of employment, currency, employer, employment status, income level and ability to provide evidence may all be relevant.
This can become particularly important if you are keeping an existing UK mortgage while also paying rent or a mortgage in your country of residence.
Don't forget your overseas housing costs
One of the key considerations for an expatriate is that maintaining a UK property may not be your only housing commitment.
You could have:
- A UK mortgage
- Rent overseas
- An overseas mortgage
- UK property costs
- Overseas living costs
- Other loans and financial commitments
Affordability can therefore need to take account of your wider financial position.
As Kathryn's experience highlights, the challenge for some expats is demonstrating affordability while they are managing the costs of their overseas life alongside a UK mortgage.
What about exchange rates?
If you earn overseas but have a UK mortgage in pounds, there is an additional currency consideration.
Changes in the exchange rate can affect the sterling value of your income even when your salary in your local currency has not changed.
For example, if you are paid in euros and your mortgage payments are in pounds, the amount of euros needed to meet your mortgage payment can change as exchange rates move.
This does not necessarily prevent you from obtaining a mortgage, but it is an important consideration when assessing your overall finances.
What if you already have a UK mortgage?
If you already have a mortgage on your UK property, moving overseas does not necessarily mean you need to sell the property.
However, your circumstances may change significantly once you become an expatriate.
If you later want to:
- Remortgage
- Raise additional funds
- Change the mortgage
- Buy another UK property
- Rent out your existing property
your overseas residency and income may become relevant to the lender's assessment.
It is therefore worth considering your longer-term plans rather than looking only at your immediate mortgage requirements.
Keeping a footing for retirement
For some British expats, maintaining a UK property is part of a longer-term retirement plan.
You might spend several years working overseas before eventually returning to Britain.
Having a UK property can potentially provide a future home, but your circumstances may change considerably between buying the property and returning.
Your income, employment, residency, mortgage balance and property plans may all be different by the time you return.
It is therefore important not to assume that a mortgage arrangement suitable today will necessarily remain suitable throughout the whole period of ownership.
What should you consider before keeping or buying a UK property?
Before making a decision, consider:
Your reason for keeping the UK connection
Are you planning to return, provide a family home, use the property when visiting, or hold it as an investment?
How the property will be used
The intended use can affect the type of mortgage that may be appropriate.
Your overseas income
Consider how your income is earned, its currency and how easily it can be evidenced.
Your wider commitments
Look at your UK and overseas mortgages, rent, loans and other financial commitments together.
Your deposit and equity
If buying another property, consider how much deposit you have available and whether you are using savings or equity from another property.
Your longer-term plans
Think about whether you expect to remain overseas for a few years, return to Britain, retire in the UK or continue building a UK property portfolio.
Common mistakes British expats make
Assuming their existing UK mortgage will always remain suitable
Your circumstances can change after moving overseas, particularly if you later want to remortgage or change how the property is used.
Renting out a property without checking the mortgage
A residential mortgage may not be appropriate for a property that is being rented to tenants.
Ignoring overseas housing costs
Your UK mortgage is only part of your financial commitments if you also have rent or a mortgage overseas.
Ignoring currency risk
If your income is in another currency and your mortgage is in pounds, exchange-rate movements can affect the cost of your mortgage in your local currency.
Assuming every lender treats expats the same way
Lender criteria vary by country of residence, income, currency, property and individual circumstances.
Kathryn's Insight
A UK property can be much more than an investment for an expatriate. For some clients it is a future home, a base for the family or somewhere they can return to when their overseas career comes to an end.
The important thing is to be clear about what role the property is going to play. That helps determine what mortgage and property arrangements need to be considered.
What should you do next?
If you are living overseas and want to maintain a UK property connection, start by clarifying your plans.
Think about:
- Why you want to keep or buy the property.
- How the property will be used.
- Where your income comes from and what currency it is paid in.
- Your UK and overseas financial commitments.
- Whether you expect to return to Britain in the future.
- Whether you may want to rent the property out.
If you are considering buying or remortgaging a UK property while living overseas, understanding these factors before making a commitment can help you establish what mortgage options may be available.
How Giraffe Private Finance can help
If you are a British expatriate looking to maintain a UK property connection, Giraffe Private Finance can help you understand the mortgage considerations based on your circumstances.
Whether you are buying a future home, retaining an existing property or considering your options before returning to Britain, the mortgage needs to reflect your circumstances and intended use of the property.
Lending criteria vary between lenders and eligibility depends on individual circumstances. This article provides general information and does not constitute personalised mortgage, tax or legal advice.
Author/Reviewer: Kathryn, Giraffe Private Finance
How to prepare for your return to the UK
Coming home is easier when you’ve planned for what comes next.
Returning to the UK after living overseas can involve more mortgage and property considerations than simply finding somewhere to live. If you already own UK property, are planning to buy before returning, or have overseas income and financial commitments, it is worth reviewing your position well in advance.
Your income, employment, deposit, existing borrowing, overseas commitments and plans for your UK property can all influence the mortgage options available to you. Preparing early can also give you more time to understand your options before making a property commitment.
Why should you prepare early?
Moving back to the UK can involve a lot of changes at the same time.
You may be:
- Starting a new job in the UK
- Moving your family back
- Buying a property
- Selling an overseas home
- Keeping a UK property you already own
- Remortgaging an existing UK mortgage
- Moving your savings back to the UK
- Managing financial commitments in two countries during the transition
If you are planning to buy a UK property, waiting until you have returned before thinking about your mortgage may unnecessarily limit your options.
For some British expatriates, it can be useful to understand their potential mortgage position while they are still overseas.
1. Decide what you are going to do with your existing property
If you already own a UK property, start by deciding what role it will play when you return.
You may want to:
- Move back into it
- Sell it and buy another property
- Keep it as a rental property
- Keep it as a second home
- Remortgage it before or after returning
The intended use of the property matters.
For example, a property you intend to live in is different from one you intend to rent to tenants. If your plans change, you should check that your mortgage arrangements remain appropriate for the way the property will be used.
2. Review your current mortgage
If you already have a UK mortgage, check the terms before making plans to move back.
Consider:
- Your current interest rate
- When your current deal ends
- Any early repayment charges
- Your outstanding mortgage balance
- Your current monthly payment
- Whether you may need to remortgage
- Whether you have changed circumstances since the mortgage was originally arranged
If you have been living overseas, your circumstances may have changed considerably since you first took out the mortgage.
Your income, employment, residency and financial commitments could all be different.
3. Understand how your income will change
One of the biggest considerations when returning to the UK can be your income.
You may be returning to the same employer, taking a new UK role or changing your career entirely.
If you are applying for a mortgage around the time of your return, lenders may need to understand your employment and income position.
For example, you may have:
- A confirmed UK employment contract
- A new UK salary
- Income from self-employment
- Overseas income that will continue after your return
- Variable or bonus income
- Income from investments or property
The way different types of income are considered can vary between lenders.
If your circumstances are changing, it is therefore useful to establish what evidence may be required rather than assuming that your overseas income and future UK income will be treated in exactly the same way.
4. Review your overseas financial commitments
Returning to the UK does not necessarily mean that your overseas financial commitments disappear immediately.
You might still have:
- An overseas mortgage
- Rent
- Personal loans
- Credit commitments
- Property expenses
- Business interests
- Other financial obligations
These commitments can be relevant when assessing your overall affordability.
If you are planning to buy a UK property, prepare a clear picture of your financial commitments in both countries.
This can make it easier to understand your overall position before you start the mortgage application.
5. Work out how much deposit you have available
If you are buying a property, establish your available deposit early.
Your deposit could come from:
- UK savings
- Overseas savings
- The sale of an overseas property
- Equity from an existing UK property
- Investments
- A permitted gift
If your deposit is currently held overseas, you may need to provide evidence showing where the funds came from and how they have moved between accounts.
Keeping clear records of your savings and other assets can therefore be helpful when preparing for a mortgage application.
Remember that your deposit is not the only cash you may need. You should also allow for the other costs associated with purchasing a property.
6. Consider your currency position
If you have been earning overseas, your savings and income may be held in a foreign currency.
When returning to the UK, you may convert some of those funds into sterling.
Exchange-rate movements can affect the amount of sterling you ultimately have available for your deposit or other property costs.
If you continue to receive overseas income after returning, the same consideration can apply to your mortgage affordability.
Currency is therefore worth considering as part of your wider financial planning rather than treating it as a separate issue.
7. Start gathering your documents
A mortgage application can require a considerable amount of financial information.
For an expatriate returning to the UK, some of the documentation may relate to your time overseas.
Depending on your circumstances and the lender, you may need information such as:
- Proof of identity
- Proof of address
- Employment details
- Income evidence
- Bank statements
- Details of existing mortgages
- Details of other financial commitments
- Evidence of your deposit
- Information about your UK property
If you have been overseas for several years, locating older documents can take time.
Starting to organise your paperwork before you need it can help make the process more straightforward.
8. Think about timing your mortgage application
There is no single ideal time for every returning expatriate to apply for a mortgage.
Your position might be different depending on whether you:
- Already own a UK property
- Have a confirmed UK job
- Are still employed overseas
- Have already returned to Britain
- Are selling an overseas property
- Need to remortgage an existing UK property
Lender criteria vary, so the point at which you apply can potentially affect the options available.
If you know you intend to return within the next year or two, it can be useful to start thinking about the mortgage implications before the move itself.
9. Consider whether you will buy before or after returning
Some British expatriates wait until they are back in the UK before purchasing.
Others consider buying while still overseas.
There is no universal answer as to which approach is better.
Buying before returning may allow you to secure a property ahead of the move, but you will need to understand how your overseas circumstances affect the mortgage application.
Waiting until you return may simplify some aspects of your circumstances, but your mortgage options will still depend on your employment, income, deposit, affordability and other factors.
The right approach depends on your individual circumstances and plans.
10. Don't forget your longer-term plans
Your return to the UK may be permanent, or it may simply be the next stage of your career.
Before committing to a property, consider how long you expect to stay and how your plans could develop.
For example:
- Are you returning permanently?
- Could you work overseas again?
- Will your children remain in the UK?
- Do you expect to move to another part of the country?
- Could you want to rent the property out in the future?
- Are you planning for retirement?
You cannot predict every future change, but thinking about your likely plans can help you avoid making a property decision based solely on your immediate circumstances.
Common mistakes returning expats make
Leaving mortgage planning until after the move
A return to the UK can involve many competing priorities. Starting the mortgage process early can give you more time to understand what information may be required.
Assuming your previous mortgage guarantees future borrowing
Having successfully obtained a UK mortgage in the past does not automatically mean you will meet current lender criteria.
Your circumstances and the lender's criteria may have changed.
Forgetting overseas commitments
Existing overseas mortgages, loans and other commitments may still be relevant to your financial position.
Not keeping evidence of overseas finances
Bank statements, employment records and evidence of savings can be useful when demonstrating your financial circumstances.
Assuming every lender treats returning expats the same way
Lender criteria vary, particularly where overseas income, residency or recent changes in employment are involved.
Kathryn's Insight
If you know you are coming back to the UK, I would encourage you to think about the mortgage before the removal van arrives.
The earlier you understand your position, the more time you have to organise your finances, gather documentation and consider your options. This can be particularly useful where you are moving from overseas employment back into the UK or still have financial commitments abroad.
What should you do next?
If you are planning to return to the UK, start by reviewing your current financial and property position.
Consider:
- What you intend to do with any existing UK property.
- When your current mortgage deal ends.
- What your UK income is likely to be.
- Which overseas financial commitments will remain.
- How much deposit you have available.
- Whether your savings are held in sterling or another currency.
- What documentation you will need.
- Whether you intend to buy before or after returning.
These steps can help you build a clearer picture of your position before you commit to a property or mortgage.
How Giraffe Private Finance can help
If you are a British expatriate planning your return to the UK, Giraffe Private Finance can help you understand the mortgage considerations based on your circumstances.
Whether you are buying your first UK home, returning to an existing property or considering your remortgage options, understanding the factors lenders may consider can help you prepare for the next stage.
Lending criteria vary between lenders and eligibility depends on individual circumstances. This article provides general information and does not constitute personalised mortgage, tax or legal advice.
Author/Reviewer: Kathryn, Giraffe Private Finance
How to prepare when leaving the UK
A new life abroad starts with getting the important things at home in order.
Leaving the UK to live overseas is a major financial and practical change, particularly if you own a UK property or have an existing mortgage. Before you move, it is worth reviewing your mortgage, deciding what you intend to do with any UK property, checking your insurance and understanding how your overseas income and financial commitments may affect you.
Preparing before you leave can help avoid problems later, particularly if you decide to keep your UK property, rent it out or eventually return to Britain.
Why should you prepare before moving overseas?
Moving abroad can involve more than simply changing your address.
You may be leaving behind:
- A UK home
- An existing mortgage
- Bank accounts and investments
- Insurance policies
- Employment and income
- Family financial commitments
- Plans to return to the UK in the future
Your circumstances can also change once you become an expatriate. If you later need to remortgage, raise additional borrowing or buy another UK property, your overseas residency and income may become relevant to the lender.
Thinking about these issues before you leave can give you more time to make informed decisions.
1. Decide what you are going to do with your UK property
If you own a property, one of your biggest decisions will be whether to:
- Sell it before leaving
- Keep it as your future UK home
- Allow family to use it
- Keep it as a second home
- Rent it to tenants
There is no universally right answer.
Your decision will depend on your plans, finances and how long you expect to remain overseas.
However, the intended use of the property is important because different mortgage arrangements may apply depending on whether you intend to occupy the property or rent it out.
2. Check your existing mortgage
If you have a mortgage, review the terms before leaving the UK.
Consider:
- Your current interest rate
- When your mortgage deal ends
- The outstanding balance
- Your monthly payments
- Any early repayment charges
- Whether you expect to remortgage while overseas
- Whether your mortgage permits the intended use of the property
Do not assume that moving abroad automatically means you need to repay the mortgage. However, if your circumstances or the use of the property are changing, it is important to establish whether your existing arrangements remain appropriate.
3. If you plan to rent out the property, check first
Becoming an accidental landlord is a common situation for British expatriates.
You may decide to keep your UK home and rent it out rather than sell it when you move overseas.
Before doing this, check that your mortgage arrangements permit the property to be rented.
A residential mortgage and a buy-to-let mortgage are designed for different circumstances. If you already have a residential mortgage and your plans change, speak to your mortgage provider or adviser before allowing tenants to move in.
You should also consider landlord responsibilities, insurance and any relevant tax obligations.
GPF can provide general mortgage information, but tax and legal matters should be discussed with appropriately qualified professionals.
4. Think about your future mortgage needs
Your immediate priority may be getting settled overseas, but it is worth considering what you might need from your UK mortgage in the future.
For example, you may eventually want to:
- Remortgage
- Raise additional funds
- Buy another UK property
- Move back to Britain
- Purchase a future family home
- Retain an existing property while buying another
Once you are living overseas, your country of residence, income currency and employment can become relevant to a mortgage application.
Lender criteria vary, so a mortgage option that was available to you while living in the UK may not necessarily be available on the same basis after you move.
5. Understand your overseas income
Once you move abroad, your income may be paid in a different currency.
For example, you could be earning in:
- Euros
- US dollars
- UAE dirhams
- Australian dollars
- Singapore dollars
- Another local currency
Some lenders consider overseas income, but the way it is assessed varies.
Your employment, employer, income currency, length of employment and ability to provide evidence may all be relevant.
If you think you may need a UK mortgage after moving overseas, keeping clear records of your employment and income can be useful.
6. Consider your currency exposure
If you have a UK mortgage but earn in another currency, exchange rates can become an important consideration.
Your mortgage payment may remain the same in pounds while the amount of your local currency needed to make that payment changes.
For example, someone earning in euros and paying a UK mortgage in pounds will be exposed to movements between the euro and sterling.
This does not necessarily prevent you from maintaining a UK mortgage, but it is something to consider when planning your finances overseas.
7. Review your insurance
If you are leaving a property empty or renting it out, check that your buildings and contents insurance remains appropriate.
Your insurance provider may need to know that you are no longer living at the property or that tenants will be occupying it.
Do not assume that an existing policy will automatically continue on the same basis after you move overseas.
The exact requirements depend on your policy and circumstances, so check directly with your insurer.
8. Keep your financial documents organised
Living overseas can make it more difficult to locate UK financial documents later.
Before leaving, make sure you have access to important information relating to:
- Your mortgage
- Bank accounts
- Property ownership
- Insurance
- Investments
- Employment
- Income
- Existing loans and credit commitments
If you later apply for a mortgage while living overseas, you may need to provide evidence of your current financial circumstances.
Keeping your records organised from the beginning can make this easier.
9. Think about your UK banking arrangements
Your UK bank accounts may continue to be useful while you are overseas, particularly if you retain a UK mortgage or property.
However, your circumstances may affect how individual financial providers deal with you once you become resident overseas.
Check the arrangements with your relevant providers and make sure you understand how you will manage your UK financial commitments from abroad.
10. Consider your longer-term plans
You may be leaving the UK for a fixed period, or you may have no idea how long you will stay.
Either way, it is worth considering what you might want to do eventually.
You might:
- Return to the UK
- Retire in Britain
- Keep your UK property permanently
- Sell the property later
- Buy another property
- Build a UK property portfolio
Your plans do not need to be fixed.
However, having an idea of what you want your UK property and mortgage position to look like in the future can help you make better decisions before leaving.
What if you decide to return to the UK?
Your circumstances when you return may be very different from when you left.
Your income, employment, savings, property and financial commitments may all have changed.
If you have kept a UK property, you may decide to move back into it. Alternatively, you may want to sell it and purchase another home.
If you are planning your return, it can be useful to review your mortgage position before the move rather than waiting until you are back in Britain.
Common mistakes British expats make when leaving the UK
Assuming they have to sell their property
Moving overseas does not automatically mean you need to sell your UK property. Your options will depend on your circumstances and plans.
Renting out a property without checking the mortgage
Changing the use of a property can have mortgage implications. Check your arrangements before tenants move in.
Forgetting about future remortgaging
If your mortgage deal ends while you are overseas, your options may be affected by your country of residence and overseas income.
Ignoring currency considerations
A UK mortgage combined with overseas income creates an element of currency exposure.
Leaving documentation until later
Finding UK employment and financial records several years after moving abroad can be more difficult than keeping them organised from the start.
Assuming your UK mortgage options will remain unchanged
Lender criteria can vary depending on residency, income, currency and other circumstances.
Kathryn's Insight
Leaving the UK is often an exciting time, and mortgages and property can easily become something you deal with later.
But if you own a UK property, I think it is worth making a clear plan before you leave. Knowing whether you intend to keep, sell or rent the property can help you understand what needs to be checked with your mortgage provider and what you may need to consider if your plans change later.
What should you do next?
Before leaving the UK, consider:
- What you want to do with any UK property.
- Whether your existing mortgage remains appropriate.
- Whether you may want to rent the property out.
- When your current mortgage deal ends.
- How your income will change after moving overseas.
- What currency you will be paid in.
- Your UK and overseas financial commitments.
- Your insurance arrangements.
- Keeping copies of important financial documents.
- Whether you expect to return to the UK in the future.
You do not need to have every future decision made before you leave. The aim is simply to understand the consequences of the choices you are making now.
How Giraffe Private Finance can help
If you are a British homeowner preparing to move overseas, Giraffe Private Finance can help you understand the mortgage considerations around keeping or refinancing UK property while living abroad.
Whether you plan to keep your home, rent it out or eventually return to Britain, understanding how your change of circumstances could affect your mortgage can help you prepare.
Lending criteria vary between lenders and eligibility depends on individual circumstances. This article provides general information and does not constitute personalised mortgage, tax or legal advice. Tax and legal matters should be discussed with appropriately qualified professionals.
Author/Reviewer: Kathryn, Giraffe Private Finance
