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Understanding Foreign Income Mortgages

What are foreign income mortgages?

With greater global interconnectivity, it’s become common practice for individuals to receive income from sources outside of the UK. You might be an expat living abroad earning income from your host country, living and working here in the UK but working for a company located overseas, or perhaps you have investments abroad from which you draw an income.

Whatever your situation, if you’d like to use this income towards purchasing or refinancing a property in the UK, you’ll need to find a lender who accepts foreign currency. Foreign income mortgages allow you to purchase or refinance property using overseas income, but they aren’t offered by all mortgage lenders. Obtaining mortgages using income paid in a foreign currency can be more complicated compared to other types of mortgages. You’ll often find there are more ‘hoops’ to jump through and the rules can be stricter. That’s why we recommend speaking to our specialist mortgage team who can handle the process for you.

Is it difficult to secure foreign income mortgages?

There are several reasons why an individual might struggle to secure a mortgage using income paid in a foreign currency.

  • Some borrowers can struggle to prove their income. Your mortgage lender may not accept your documents or accept all types of pay that you receive. Some lenders require that your income is paid into a UK bank account.
  • Not all lenders will accept foreign currency and those that will, do not accept all currencies.
  • Less lenders are offering foreign income mortgages due to the additional checks they have to carry out under UK legislation. Lenders may be required to monitor the exchange rates for their borrowers and warn them if rates exceed certain limits.
  • Lending criteria can be stricter for mortgages based on foreign currency which can make securing the mortgage you need more difficult. You may need to put down a larger deposit and will need to meet the individual lender’s income requirements.
  • If you are an expat living abroad with minimal credit history in the UK, this can also be a further obstacle to securing a mortgage. Lenders can be hesitant to lend if you don’t have a UK correspondence address or have very little credit history in the UK.

Who are foreign income mortgages for?

Foreign income mortgages won’t be suitable for everyone. The most common scenarios we see are:

  • You live in the UK, but work for an overseas employer and receive income in a foreign currency
  • It’s a joint application, one of you lives here in the UK and the other works overseas/offshore
  • You are an expat and want to buy or remortgage a BTL property in the UK using income earned in your host country
  • You own property or investments abroad and receive payments / rent in a foreign currency

Whilst the situations above are most common, this list is not exhaustive. If your situation is different, please reach out for a confidential discussion.

What foreign currencies will lenders accept for a mortgage application?

Accepting foreign currency is risk for lenders due to the constantly changing exchange rates. Different currencies are also higher risk than others, so some lenders do place restrictions on what currencies they will accept.

The most commonly accepted foreign currencies are:

  • Euro
  • US Dollar
  • Yen
  • Hong Kong Dollar
  • Saudi Riyals
  • UAE Dirham

If you don’t see your currency listed above, contact our team to find out more. Lender criteria is constantly changing and it’s possible we have lenders available who will accept your income.

How do foreign income mortgages work?

The mortgage application process is different for applicants in receipt of an income in a foreign currency. You’ll need to supply income documents and bank statements but if these are in a foreign language these may need to be translated into English. Your lender may also carry out additional checks into your employer as part of their assessment.

The lender will convert your income into pound sterling. The lender will carry out this conversion factoring in an allowance for currency fluctuations.

After the mortgage has completed, the lender may continue to monitor the exchange rate throughout the term of your mortgage and could notify you if they have concerns over fluctuations.

What’s a ‘haircut’?

One term that may come up during the mortgage application is a ‘haircut’. Lenders use this term to describe a percentage that they may deduct from your income when carrying out their calculations. This deduction is cautionary on the part of the lender and provides them with an additional safety net. Not all lenders will deduct a ‘haircut’ and our experienced team will ensure your application is placed with the best mortgage lender for your situation.

Why use Simple Fast Mortgage to secure a mortgage with foreign currency?

Applying for a mortgage when you receive your income in a foreign currency is rarely a straightforward process which is why it’s worth working with an experienced mortgage advisor. Our professional team has worked with many expats and other individuals who earn a foreign currency and regularly liaise with the lenders who offer these types of mortgages. By working with Simple Fast Mortgage, we will secure the mortgage finance that you need that’s right for your situation. Contact us today to start your mortgage application.

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