Can I get a UK mortgage while living in the Gulf?

General information only. This guide explains how UK lenders usually approach Gulf residents. 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 in the Gulf does not stop you getting a UK mortgage. Many British expats and foreign nationals in Manama, Dubai, Riyadh, Doha, Kuwait City and Muscat buy UK property every year. What changes is who will lend to you and on what terms.

Most UK high street banks either decline applicants who live overseas or only help existing customers. The market for Gulf residents is made up of specialist expat lenders, the international arms of UK banks, some building societies and private banks. They accept Gulf income, but they typically ask for a larger deposit than a UK resident would need, and they look closely at your job, your currency and your UK credit history.

Which lenders accept Gulf residents

Lender appetite varies by country, by nationality and by type of mortgage. A lender that welcomes a British expat in Dubai may not lend to a foreign national in Kuwait, and a lender that offers buy-to-let to Gulf residents may not offer a mortgage on your own home. Broadly:

• British expats have the widest choice, particularly if they plan to return to the UK.
• Foreign nationals living in the Gulf can also borrow, though the panel of lenders is smaller and deposits are often higher.
• Buy-to-let has more lenders available to Gulf residents than mortgages for your own home.

Because criteria differ so much, the order you approach lenders in matters. Each application leaves a mark on your credit file, so it pays to know a lender will accept your circumstances before you apply.

Deposit and how much you can borrow

Most lenders for Gulf residents lend up to 75% of the property value, so plan for a deposit of at least 25%. A small number go higher for British expats with strong profiles, and some ask for 30% or more for foreign nationals or certain property types. The best rates are usually found at 60% to 65% loan to value.

How much you can borrow then depends on the purpose:

• Your own home: as a guide, lenders offer up to about 4.5 times gross income (combined for a joint application), on a repayment basis. Commitments such as loans, school fees and other mortgages can reduce this.
• Buy-to-let: the loan is based mainly on the rent. Lenders test that the rent covers the interest at a stress rate, usually by 145% for individuals and 125% for limited companies.

How lenders treat Gulf income

Gulf salaries are usually paid tax free, and that can look generous on paper. UK lenders assess your gross income and then apply their own rules:

• Currency. Your income is converted into pounds. Many lenders reduce foreign income by 10% to 25% to allow for exchange rate movements, or convert it at the lowest exchange rate seen over a period of several years. The UAE dirham, Saudi riyal, Qatari riyal, Bahraini dinar and Omani rial are pegged to the US dollar, and the Kuwaiti dinar is linked to a basket of currencies, which some lenders view favourably. Even so, the pound moves against all of them.
• Allowances. Housing, transport and education allowances are a large part of many Gulf packages. Some lenders count them in full, some in part and some not at all, which can make a big difference to how much you can borrow.
• Bonuses and commission. These are usually averaged over one to two years, and some lenders count only a proportion.
• Contract type. Fixed term and renewable contracts are common in the Gulf. Lenders generally want to see that you have passed probation and have a track record in your job or field.
• Self-employed and business owners. Possible with some lenders, normally with two or more years of accounts.

This is where most applications succeed or fail. Two lenders can look at the same payslip and reach very different figures.

Country by country

The principles are the same across the Gulf, but lenders do distinguish between countries, and each country has its own residence documents.

Documents you will need

Lenders for overseas applicants ask for more paperwork than UK lenders. Having it ready speeds things up considerably. Typically:

• Passport, and your Gulf residence visa or ID card (see the table above)
• Proof of address in the Gulf, such as a tenancy contract or utility bill
• Your employment contract, and a letter from your employer confirming your salary and allowances
• Recent payslips, often three to six months
• Bank statements showing your salary being paid in, often three to six months
• Proof of your deposit and where it came from
• For buy-to-let, a rental estimate for the property
• For the self-employed, business accounts and tax or audit documents

Documents not in English may need a certified translation.

Buy-to-let from the Gulf

Buy-to-let is the most common reason Gulf residents look for a UK mortgage, and it has the widest choice of lenders. Interest only is the most popular option, keeping monthly costs down and helping the rent meet the lender's cover test. Because the loan is based mainly on the rent, the property itself matters: lenders look at the location, the type of property and the rent a letting agent can realistically achieve.

Many investors buy through a UK limited company (often called an SPV) rather than in their own name. Lenders use a lower rent cover test for companies, and the tax treatment is different, so it is worth taking tax advice before deciding which route suits you.

Stamp duty and tax

On top of your deposit, budget for stamp duty and buying costs. In England and Northern Ireland, buyers who are not UK resident pay a 2% surcharge on top of the standard rates, and anyone who already owns a property anywhere in the world (and is not replacing their main home) pays a further 5%. Your solicitor calculates and confirms the final figure.

If you let the property, the rental income is usually taxable in the UK even though you live abroad. Landlords living overseas normally register with HMRC under the Non-Resident Landlord Scheme. Tax rules depend on your circumstances, so speak to a tax adviser.

Sharia-compliant options

If you prefer not to pay interest, Sharia-compliant Home Purchase Plans are available to many Gulf residents. Instead of lending you money and charging interest, the provider buys the property with you and you pay rent on its share while you buy it out over the term. Plans are available for purchases, remortgages and buy-to-let, and are certified by an independent Sharia Supervisory Committee. Deposit and eligibility requirements vary by provider and country of residence. Read more in our guide to Sharia-compliant UK home finance for Gulf expats.

Improving your chances

• Keep a UK credit footprint. A UK bank account, a UK credit card used and cleared each month, and staying on the electoral roll where you can, all help a lender see your UK history.
• Save a larger deposit if you can. Moving from 75% to 65% loan to value usually opens up more lenders and better rates.
• Get your paperwork in order early, especially the employer letter setting out your salary and allowances.
• Avoid applying to several lenders yourself. Multiple declined applications can harm your credit file. A Decision in Principle from the right lender first tells you where you stand.
• Use a specialist. An adviser who works with Gulf residents every day knows which lenders accept your country, nationality, currency and allowances, and how each one calculates your income.