General information only. This guide explains how UK lenders usually approach remortgages for people living outside the UK. It is not advice and not an offer of lending. Every lender has its own criteria, and they change often, so speak to a mortgage adviser before making any decision.
The short answer
Living abroad does not stop you remortgaging a UK property. Expats remortgage every year to move off a lender's standard variable rate, to fix their payments, to raise money for another purchase, or to put a former home onto a buy-to-let mortgage after moving overseas.
What changes is the choice of lender. Most UK high street banks do not lend to people living overseas, and some will not even offer their own existing customers a new deal once they have moved abroad. The market for expats is made up of specialist expat lenders, the international arms of UK banks, some building societies and private banks. They usually lend up to 75% of the property's value, and they look closely at your income, your country of residence and how the property is being used.
Why it is different from abroad
When you move overseas, three things usually change in the eyes of a lender:
- Your income may now be paid in a foreign currency, which fewer lenders accept.
- Your country of residence matters. Some lenders accept residents of the Gulf, Hong Kong or Singapore, for example, but not of other countries.
- The property's use often changes. A home you lived in may now be let to tenants, which needs either your lender's permission or a buy-to-let mortgage.
None of these rules you out, but together they mean the cheapest deal you could get in the UK may not be available, and the right lender depends on your full situation.
Your options
A new deal with your current lender. Often called a product transfer. If your lender offers one, it is usually quick, with no new valuation or legal work, and you do not need to borrow more. Some lenders offer their existing expat customers the same range as UK customers, some offer a narrower range, and some offer nothing new once you live overseas, which leaves you on the standard variable rate.
A remortgage to a new lender. This means a full application, a valuation and a solicitor, but it opens up the wider expat market, lets you release equity, and lets you change the type of mortgage, for example from residential to buy-to-let.
Remortgaging a buy-to-let you already own. If the property is already let on a buy-to-let mortgage, the remortgage is based mainly on the rent. This is usually the most straightforward case for an expat.
Compare both routes before your current deal ends. A product transfer is not always the cheaper option once fees and the rate are added together, and a new lender is not always available. Our expat mortgage calculator shows how much you could borrow from your rent and what it would cost each month.
Letting your former home
If you move abroad and let your former UK home, you must not simply let it on a residential mortgage. You have two routes:
- Consent to let. Many lenders will give permission to let the property on your existing residential mortgage, often for a fee and sometimes with a higher interest rate. It is usually a short-term arrangement and typically lasts until your current deal ends.
- Remortgage to buy-to-let. For a longer stay abroad, moving onto a buy-to-let mortgage is usually the longer-term answer. Lenders test that the rent covers the interest at a stress rate, usually by 145% for individuals and 125% for limited companies.
Letting without telling your lender can breach your mortgage terms and may affect your buildings insurance, so speak to your lender or an adviser before the tenants move in.
How lenders assess you
For a buy-to-let remortgage, the loan is based mainly on the rent, which is paid in pounds. Many lenders still set a minimum personal income and want to see that you can cover the mortgage if the property is empty.
For a home you or your family will live in, the loan is based on your income. Many lenders use around 4.5 times your income as a guide, after converting it into pounds. If you are paid in a foreign currency, lenders often reduce it, commonly by 10% to 25%, to allow for exchange rate movements. Our guide to UK mortgages with Gulf currency income shows how this works in practice.
Where income is paid in a foreign currency, changes in exchange rates may affect the amount you need to repay in sterling. For a mortgage on a home you or your family will live in, the lender must also have arrangements to limit that risk and must warn you if movements change what you owe or your payments by more than 20%.
Lenders will also look at your UK credit history. A UK bank account and a UK credit card that you keep using and clear each month help to show it.
Releasing equity
If your property has gone up in value or you have paid down the mortgage, you can borrow more against it, usually up to 75% of its current value. Expats commonly release equity to fund a deposit for another UK property, to pay for home improvements or to repay other borrowing. Lenders will want to know what the money is for.
If you use released equity to buy another home, remember that owning one residential property already means you pay the 5% additional property surcharge on the next one, and non-UK residents pay a further 2% in England and Northern Ireland. Our stamp duty and buying costs calculator adds these up for you.
Timing and costs
- Start three to six months early. Many lenders let you secure a new rate several months before your current deal ends, and an expat remortgage can take longer than a UK one.
- Check for early repayment charges. Leaving a fixed rate early usually costs a percentage of the loan, so time the switch to the end of your deal unless the numbers clearly work.
- Allow for the costs. Lender arrangement fees, a valuation, legal fees and an adviser's fee. Some lenders offer a free valuation or free standard legal work on remortgages.
- Plan for the valuation. The valuer needs access to the property, which means arranging it with your tenants or letting agent.
Adding or removing a name
A remortgage is often the point at which people change who owns the property, for example adding a spouse or removing a former partner. This is a transfer of equity and needs a solicitor. Stamp Duty Land Tax can apply if the person taking a share pays money or takes on part of the mortgage, because the share of the mortgage counts towards the price paid, although transfers on divorce or separation are not charged. Your solicitor will confirm whether any stamp duty is due.
Tax points for landlords abroad
Rental income from a UK property is usually taxable in the UK even though you live overseas. Under the Non-Resident Landlord Scheme, your letting agent, or your tenant if you have no agent and the rent is over £100 a week, normally deducts basic rate tax from the rent unless HMRC has approved you to receive it in full. You usually also need to file a UK Self Assessment tax return.
For individual landlords, mortgage interest is not deducted from rent as an expense; instead you receive a tax credit at the basic rate. Selling a UK property while living abroad can also have UK tax consequences. Tax depends on your circumstances, so speak to a tax adviser.
The documents you will need
- Passport, and proof of your overseas address and residence visa where relevant
- Your current mortgage statement, and any consent to let letter
- Recent payslips, an employment contract or salary certificate, and bank statements showing your salary paid in
- For a buy-to-let, the tenancy agreement and evidence of the rent, or a letting agent's rental estimate
- For business owners, at least two years of company accounts
- Details of any other properties you own and their mortgages
Most of the process can be handled remotely, with electronic signing and video calls. Some lenders ask for documents to be certified, or for signatures to be witnessed, which can be arranged where you live.
If you prefer not to pay interest, Sharia-compliant Home Purchase Plans can also be used to refinance an existing mortgage. Read our guide to Sharia-compliant UK home finance.
Before you apply
- Diarise your deal end date and start looking three to six months before it.
- Ask your current lender what it will offer you as an expat, so you have something to compare.
- Sort out the letting position first. If the property is let, make sure you have consent to let or a buy-to-let mortgage in place.
- Keep a UK footprint. A UK bank account and credit card help lenders see your history.
- Leave room for the exchange rate if your income is not in pounds.
- Avoid applying to several lenders yourself. Each application leaves a mark on your credit file. A Decision in Principle from a lender that accepts your country of residence tells you where you stand first.
For more on how lenders treat your country of residence, see our guides for the Gulf, Dubai, Hong Kong and Singapore and Malaysia.
Talk it through with an adviser
Every lender treats expat remortgages differently, so this guide is a starting point, not an answer. Speak to a specialist UK expat mortgage adviser who will compare your current lender's offer with the wider expat market and can arrange a Decision in Principle, usually within 24 to 48 hours. The first consultation is free.