Foreign Currency Income
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Foreign Currency Income
David Walsh explains the process of getting a UK mortgage when using foreign currency income.
Can someone get a UK mortgage based on foreign currency?
Yes. As long as the property that will be security for the loan is in the UK, you can use foreign income. We come across this fairly frequently.
Can it be difficult to get a UK mortgage on an overseas income?
A few lenders will accept overseas income for a mortgage application. It’s worth clarifying early on the difference between foreign currency income and overseas income.
Foreign currency is relatively straightforward. Let’s say you’re based in the UK but you work for an American law firm and are paid in US dollars. That is relatively straightforward. All your payslips are just denominated in USD.
Overseas income is where you are physically working in a foreign country. In that case we have to evidence that income to borrow against a UK property and use a UK lender.
Both of these are doable, but there’s a slight difference in the process and the income evidence requirements.
Are there plenty of lenders that accept foreign income?
Not a huge number. Not every lender will do it. Obviously a lot of work goes into making sure they are being responsible in their lending. It would include researching fluctuation in foreign currency and exploring overseas credit reports. Not every lender will want to get into that for the volume of business that it would generate.
But the good news is that there are three high street banks that use foreign currency income and overseas income. They are Halifax, Natwest, Santander and HSBC. And, if you’re looking at borrowing larger sums, typically over £1 million, that brings private banks into play.
(Article written March 2025)
They are obviously a lot more flexible with their underwriting and can look at things on a more individual basis. So there are some good options. Not every lender will do it, but we still have some good high street options and private banks at the higher end.
Does a mortgage applicant need to declare their foreign income?
It depends if it’s required for the application. You might work in the UK but have investments overseas that generate income. If we can get the affordability for the loan to fit just on your earned income in the UK, we don’t actually need evidence of that foreign currency income. So in that case we don’t need to declare it.
But if we need to use that income to make the affordability of the loan fit, yes, we would need to declare it and evidence it.
That goes for all kinds of income. We get a lot of clients who have bonus income. If the loan they’re looking to take fits on their basic salary, there’s no need to make extra work for ourselves by evidencing that bonus income with previous payslips and P60s. We try to make life easy for ourselves and our clients.
Can you get a UK mortgage if you work abroad and have a foreign income?
You can. The three high street banks have a few different nuances within their policies. If you are based overseas for work but you return to the UK to live, you can get a UK mortgage with all three.
An example might be someone that works abroad during the week and comes home at weekends. Or, you might be overseas on a secondment, but your plan is to return to the UK for good. It’s also allowed if you have dependent relatives in the UK but you work overseas.
There are also restrictions from certain lenders around the country you’re working in and the currency you’re paid in. Again, it’s down to the specifics of the case, but if you’re working somewhere not too remote and not on a sanctioned list, there’s probably an option for you.
Different criteria apply. If you’re earning mainstream currency like US dollars, euros or Swiss francs, some lenders use all of that income. Some might take a haircut to account for fluctuations and currency – such as taking 10% off that income for affordability.
If you’re earning money in a less stable foreign currency, the lender may take a bigger haircut. They could knock off 20% or 25% off that income to account for wider fluctuations in the exchange rate.
Which currencies are accepted by UK mortgage lenders?
With someone like Santander it’s fairly narrow – they will only look at US dollars, euros and Swiss francs. They’re quite strict and will apply a 25% haircut to all three currencies.
Natwest is a lot more broad. They don’t take a haircut on foreign currency for mainstream, stable currencies. Like HSBC, they have a matrix that they update regularly, listing every foreign currency that’s accepted and the percentage haircut applied. They are pretty generous in the currencies that they accept.
It changes, so I don’t want to give specifics, but some small local currencies are included. The more local you go, the larger the haircut that’s applied. It’s worth having a conversation with a broker to look at whether your currency is acceptable and what haircut is applied, but there will often be an option for you.
Are any common foreign currencies not accepted by UK lenders?
Not really. As I said Santander are quite specific but the likes of Natwest and HSBC are pretty broad.
Looking at HSBC’s current matrix, which is subject to change, they accept Belize dollars or Bermudan dollars with a 20% haircut – currencies from fairly small countries.
(Article written March 2025)
Usually if someone’s main residence is the UK and they’re working abroad, nine times out of 10 they will be earning in a more mainstream currency. We typically work with US dollars, euros and sometimes Australian dollars, which again are acceptable.
If you’re in a smaller country, give us a call and we can see what’s being offered at the time.
What if it’s a joint mortgage and only one person has a foreign income – is that possible?
Yes, definitely. It will actually broaden your options, especially if you’ve got a dependent relative living in the UK in the property full time.
If you have two incomes, they will be treated independently. If one of you is earning US dollars, for example, the lender will look at that with a haircut applied. If you’re earning pounds sterling in the UK they will apply standard policy and then combine the two to calculate affordability for the loan.
How does it work if someone is self-employed?
Technically it’s possible, but it is a more tricky. It depends on where you’re based and the documentation you can provide to evidence that income.
Again, this is all subject to change and is lender specific, but some will want your accounts to be audited by a major accountancy firm. For most people the cost of that wouldn’t be worth it.
If you’re working abroad as self-employed, but you pay tax in the UK and you can evidence that through tax calculations and tax returns from HMRC, it should be OK. But if you’re paying tax abroad, it’s difficult.
What if someone has bad credit? Is it possible for them to get a mortgage with foreign income?
Possibly. It all comes down to how bad it is. The lenders we’re talking about here are fairly mainstream. They’re quite standard in their credit assessment.
There are more specialist lenders that look at adverse credit, but you’re unlikely to find a lender that will cover both that and foreign currency.
It all comes down to the individual and what’s on the credit file. We quite often find that credit scores can be misleading. While Experian or Equifax gives you a certain score, the lender won’t necessarily take that. They have their own internal scoring systems, and they may weight certain things more heavily than others.
If you think you might have issues with credit, get a copy of your credit report and send it to your broker. We can have a look through. Some things on a credit report are black and white and we will know what doesn’t fit a lender’s policy.
Other things will just come down to scoring, which varies from lender to lender. It’s a case of running a Decision in Principle and seeing if it comes back.
Lender credit scoring can be tweaked, too, so if they’re looking for more business they can relax their credit scoring system. If they’re busy they can tighten it up. It’s a bit of a moving target.
What deposit should someone have for a mortgage with foreign income?
Deposit requirements are going to be the same as with UK income. Deposit requirements typically increase the more you’re borrowing.
If you’re borrowing more, they want a larger deposit as more of a buffer. Again, it all comes down to the individual lender and their policies can change.
Does it make a difference if I am a First Time Buyer?
No, it shouldn’t make any difference. Sometimes there are slight changes in policy for First Time Buyers, but that’s not going to change just because you’re earning in a foreign currency.
Should I try the lender that I have my bank account with first?
You can. But if it’s not one of the lenders that accept foreign currency income, you won’t get very far.
Even if you are banking with HSBC, for example, who are pretty good with overseas and foreign currency income, there’s no harm in speaking to a broker that has access to a wider range of lenders. It just helps you assess your options.
The maximum loan and the rates offered will vary, so you might as well get an overview of all the options.
Next question continued below…
What Our Clients Say
What is the application process for a mortgage with overseas or foreign income?
If we’re looking at foreign currency income, that’s relatively straightforward. It’s just about checking the exchange rate on that currency and working out what that is in sterling if there are fluctuations.
For example, if you’re working for an American law firm and your salary is in US dollars, the amount you’re paid in sterling each month will vary slightly due to the exchange rate. Lenders might ask if there’s a cap or a collar – for most people that would be the case. Some lenders will look at the bottom end of that collar, and accept that income as guaranteed each month. Others may take an average of what you’ve received in the last three months.
If you’re paid in foreign currency and work in the UK, everything else is standard. That’s the only difference. If you’re working and living overseas, and you’re buying a property for your dependent relatives, there are more checks and you may need a credit reference from that country.
It might also be that you need documents translated. For example, if your contract is written in foreign language you would need to get it formally translated for the lender. There’s a little bit more work involved but generally speaking it’s not too onerous.
The overall procedure can take slightly longer while you wait for these checks to be done, but it’s not too demanding.
Does it help if I take time to prepare?
Ideally, clients would come to us fairly early on in the process. Whether they’re buying or remortgaging, we can find out exactly what’s going on with their income.
If they are overseas or earning foreign currency income, we can advise them on what will be required. They can then start work on getting things translated and getting a local credit report in good time.
Then, when they find their dream place, or they’re coming to the deadline on their current mortgage deal, everything’s lined up and ready. We’re not having to rush around.
Buying houses, especially, is a pretty stressful process. So limiting any extra pressure and stress is something we always aim for.
How long does it take to arrange a mortgage with foreign income?
It’s difficult to say. A lot depends on where you’re based. Much of the process is out of our hands – we need to rely on third parties like the reference agencies and legal teams. If you are in that situation, come and have a chat with us and we’ll give you a steer.
Can you share any examples of clients you’ve helped with foreign currency mortgages?
The most common cases are professionals working in the city. We’re London based, and we work with a lot of people earning foreign currency income in the UK. That’s our bread and butter, and in most of those cases they’re earning US dollars or euros. That’s pretty straightforward.
We also help overseas workers – such as people working on yachts who are out of the country for more than half the year. They’re actually tax resident in the UK, so we can still use that income. We’ve worked with a couple of engineers on super yachts, for example, which were interesting.
We also did a mortgage for an Australian pilot. He had lived in the UK for a long period and had indefinite leave to remain here. He worked for a cargo airline and was based all over the world, but wanted to buy a house in the UK for his daughter to live in and eventually retire to.
We’ve had some pretty weird and wonderful situations that you think surely won’t be possible. But in the end, if you fit the bill we can make it work.
You might not be able to use all your income – it might take a bit of a haircut. But if you’re not looking to absolutely maximise borrowing, that’s not an issue. There are a lot of quite quirky situations that we can find solutions for.
What are the benefits of using a mortgage broker or advisor?
The good thing is that there are a range of options, so we can look across lenders and see who’ll offer the most favourable terms. Lenders change their policy on countries and currency quite frequently, so working with someone who’s being updated by lenders on that can really help.
It might be that you speak to a broker early on in the process and you don’t find a property for six months to a year. As things change within that time, we will keep you updated – so you avoid having to do that yourself.
With any mortgage, it’s always worth having a broker look after things for you. In these cases, where there are more moving parts and more involved, why wouldn’t you outsource it and make your life easier?
What kind of deposit should I have?
With a foreign currency mortgage, if the only quirk is that currency, you would get standard terms. So, for most lenders, you would need a deposit of somewhere between 5% and 10% as a minimum.
Generally speaking, the more you’re borrowing, the larger the deposit requirements are. To a lender, the more we’re borrowing, the higher the risk. They want you to provide more equity as a buffer, so that if you default on your mortgage and they need to repossess it to sell it, they get back what they’ve put in.
That’s the reason why the deposit requirements go up on larger loans. For loans of £250,000 to £500,000, you might be OK with a 5% deposit. Loans above that tend to need a 10% deposit. For loans above a million, it’s 15% – it goes up in scale.
The only exception to that if you’re earning foreign currency is if you’re based overseas. There are two types of foreign currency mortgages – one is if you’re a UK resident and earning in a currency other than sterling. The second is if you’re based overseas, where you’re an expat resident in a foreign country and you earn foreign currency income.
In that case, the deposit requirements might be slightly different. Most expat lenders want a deposit of around 25%, and some stipulate that it must be from your own sources rather than gifted from a family member.
Does it make a difference if I’m a First Time Buyer and using foreign income?
No, it’s exactly the same as if you were a home mover. The only difference is the income and how that’s treated. The rest of the case would be standard terms.
So once the lender has done the conversion, taken any haircuts and run their affordability assessment, being a First Time Buyer won’t make any difference to the application. There’s no requirement to have been a homeowner in the past.
What if I want to purchase the property as a Buy to Let? Can you use foreign income here?
You can. For the most part with Buy to Lets, lenders will be more focused on the income the property generates. They may have minimum income requirements – around £25,000 a year is fairly common. If you have that in a foreign currency, you should be okay.
We just need to focus on the lenders that accept foreign currency. So if the lender has a requirement of £25,000, and after their conversion and haircut your gross income is still above £25,000, you meet that requirement.
The Buy to Let is then assessed on the rental it is likely to achieve and what the outgoing mortgage is going to be. If the rent covers that by the required stress testing, you should be fine.
Should I try the lender that I have my bank accounts with first?
You can do that. It’s never a terrible idea to go to your own bank, but it’s not the most efficient way of doing things.
There are only four high street lenders at the moment in November 2024 that accept foreign currency income. If you’re with one of those four, you might get lucky. If not, you’re obviously wasting your time.
Even if you’re lucky enough to be with a lender that accepts foreign currency income, you’re only getting a quarter of the options. Meanwhile, a broker who has access to all those lenders can give you a good idea as to what you can borrow across the board and on what terms.
There are two key points when we’re dealing with First Time Buyers, home movers, and even re-mortgage customers. First, each lender takes a different haircuts on foreign currency incomes. You might find that one offers a much larger maximum loan than others, which might help if you’re a first-time borrower or a home mover looking to stretch the budget.
The second point is that you want to know you’re getting the most appropriate deal for your circumstances at that point in time. Having someone look across all those lenders and advise accordingly is obviously very valuable.
So, yes, you can go to your own bank for a steer, but I generally would advise going to a broker who has a broader range of options. Generally speaking, we can advise you on those options a lot quicker than going to banks directly.
How long does the application process take with foreign currency income?
It depends. If you’re UK resident and UK employed, and it’s just that you earn in foreign currency, that’s fairly straightforward. It’s likely to be standard processing time. On average, that’s about two weeks from mortgage application to mortgage offer.
If there’s complexity to it, for example, you are working overseas and your income documents are in a foreign language or need more explanation behind them, it might take a bit longer.
As an example, we did a mortgage for a client working in Switzerland not long ago. There’s a different treatment of tax there and different allowances because he had children. Things like this are less familiar to a UK underwriter. So they needed a bit more time and correspondence with the client to explain why things are a certain way.
In extreme examples, if you are based overseas and working overseas, you might have all your documents in foreign language, in which case we need to get them formally translated. There may be more back and forth between the client and underwriter.
It also depends how busy the lender is and their timeframes for review and return – and also how efficient you are in getting the information they request.
How does the remortgaging process work?
It’s fairly similar. If you’re based in the UK and the only complexity of the case is that you’re earning foreign currency income, it’s straightforward. We just do that income conversion and take any haircuts, make sure that fits the affordability and then you’re off and running.
If you’re based overseas, there are probably a few more checks. But it’s the same with remortgages as with purchases. The income is treated the same and all the other eligibility criteria would also match.
What other factors impact eligibility on foreign currency mortgages?
If we’re looking at foreign currency income, it tends to kind of go hand in hand with residency and place of work.
There are plenty of examples where you might be earning a foreign currency just because your employer is headquartered overseas. You’re on a UK employment contract, you’re based in the UK, you’re resident here and don’t work overseas at all. That’s nice and easy. We just focus on the lenders that accept foreign currency income and do the conversion.
If there’s any element of working overseas with residency in the UK, it’s not too bad. Certain lenders have a requirement that you need to be travelling back and forth. For example, Halifax doesn’t take foreign currency income unless you’re based permanently in the UK.
NatWest will do it if you’re working overseas during the week and back at weekends. HSBC are a bit more generous – they offer pure expat mortgages, where you are permanently overseas but you have properties in the UK. It all depends on your setup as to which lenders we can use and what the requirements are.
Have you helped many clients with foreign income?
Yes, quite a few. It’s a niche that we’ve fallen into. We do a lot of work with lawyers in American firms. They work in the UK and have permanent residence here. But because the law firm they work for is headquartered in New York, their salary is denominated in US dollars.
This is all pretty straightforward. Any one of those four lenders that we talked about will accept that.That’s the most common one that we see and probably the most straightforward.
I recently had a first time buyer couple where the husband worked in the UK with standard terms, and the wife worked for a company in Ireland. She worked remotely, was based in the UK and was paid in euros. Again, that’s fairly straightforward because she’s a UK resident.
With another couple buying for the first time, one worked in the UK and the other worked in Finland during the week. At weekends he returned back to the UK because that was his main residence. We placed that one with NatWest. It’s euro income because he’s working in Finland for a Finnish company, but because the UK is his permanent home, that was acceptable.
We also had a Dutch couple who were relocating to the UK for work. The wife was offered a new job in the UK and the husband was on a contract with a Dutch company, working remotely. We were able to use that income from an overseas job, as he was moving to the UK.
A more adventurous one with HSBC recently was for a pilot who was a UK expat based in Australia, but wanted to buy a property for when he was back in the UK visiting his daughter.
That was a true expat case – he’s permanently overseas, but we were able to use his foreign currency income to purchase a UK residence here.
They’re all unique in their own way, but if there’s a solution, we usually find it.
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What are the benefits of using a mortgage broker? Should I speak to a broker before making an offer?
Yes, I always recommend speaking to a broker if you’re looking to take out a mortgage, because the range of options you’ve got is going to be that much wider. We also do a lot of the nitty gritty admin, which takes a lot of hassle and stress away from you.
Buying a house or even remortgaging a house is quite a stressful process. So if you can remove as much of that as possible, why wouldn’t you?
If you get to the point of making an offer without having spoken to a broker, it’s a backward way of doing things. You want to know what you can do before you start viewing properties.
On one end of the scale, you might be viewing properties that you can’t afford to buy, and at the other. you might have a much bigger budget than you thought.
It’s always good to understand your options nice and early. You’ll also find that when you’re making offers, the agent will ask about your financial situation, how you’re funding it. Not knowing yet doesn’t look as good as having a Decision in Principle and supplying your broker’s details.
That way you’re good to go. You’re more likely to get an offer accepted if you’ve got everything lined up and you can prove you’re able to proceed. Part of what a broker will do is get you in the right position to start offering on properties.
Is it harder to get a mortgage if my employer is based abroad?
Not necessarily. It’s not really any different from having a UK-based employer paying you in foreign currency.
An example is where a firm is headquartered in the US but has offices in the UK. You’re employed in the UK and work in a UK office, but because it’s headquartered overseas, they denominate your income in foreign currency.
That’s no different to someone who works during the week in Europe, where their employer is overseas and has no presence in the UK. You’re still paid in a foreign currency. Either way, it doesn’t make any difference to us. We’re still focusing on the same lenders and using the same policies and the same conversion. There’s no problem with that.
Are specific types of mortgages more suitable for foreign income?
Not necessarily. The products you’ll have access to as a mortgage borrower with foreign currency income will be the same as if you were a standard mortgage borrower using sterling income.
That might be fixed rates, tracker rates, two year rates, five year rates or offset facilities. It’s about setting up a mortgage that makes the most sense in your situation.
Keep in mind that if you’re paid in a foreign currency, your mortgage payments will go out in sterling at a fixed amount. If your income is denominated in a foreign currency and that exchange rate moves, you’ll need to factor that in. If the currency you’re paid in reduces in value, you would have less coming in to make those mortgage payments.
You need a bit of resilience and a buffer in your income to make sure you could make payments with any changes to the exchange rate. As a result, you might want to steer away from products that have a variable element, like tracker rates, for example.
These have two potential movements – if the base rate changes and your tracker rate went up at the same time as exchange rates moved unfavourably for you, there could be quite a big shift in what you’re receiving and what you’re paying out. It’s completely down to the circumstances and what’s right for you.
How do exchange rates impact my mortgage application?
The exchange rate impacts your mortgage application by determining how much of that income we could use.
To make an application with foreign currency income, the broker will do the conversion into sterling. We then need to notify the lender how that conversion was made and on what date.
We typically use xe.com – we just add a note to the mortgage application stating that the conversion was completed on xe on whatever date. The income is then fixed for the application.
Any changes during the application process, and even once the mortgage is completed, won’t actually impact things. It’s done upfront. Once that calculation is done, that’s the income figure we’re using.
So if you’re making an application at a point in time where the exchange rate is more favourable and the currency you’re paid in is very strong, you might be able to borrow more.
Will my mortgage payments change if my income currency fluctuates or is it a fixed rate?
The mortgage payments are fixed. The amount you pay each month in pounds sterling will not change – unless you choose a variable mortgage product. If you take a fixed rate, no changes to exchange rates will impact the monthly payment that the bank expects to receive.
But, obviously, it will impact what you have to make that payment. If exchange rates change, you could be taking in less sterling equivalent, so that means less money each month to make that mortgage payment.
The lender still expects the same amount each month, so that’s something to bear in mind. Make sure you could absorb any changes to the exchange rate that might impact how much you’re receiving in your currency versus the sterling equivalent.
Will lenders apply a ‘haircut’ or discount to my foreign income? What percentage is common?
For the most part, yes, there will be a haircut or percentage discount on the foreign currency income they use. It’s designed to account for fluctuations in exchange rates. This is the lender being responsible and considering the outcomes should the currency you’re paid go down against the pound.
Because your ability to meet mortgage payments would decrease, they deduct a percentage of that income when we make the application. It makes it more likely you could maintain those payments going forward if there are any exchange rate fluctuations.
Some lenders don’t actually take any haircuts. They’ll just use 100% of the converted income. With the lenders that do, it typically falls somewhere between 10% and 25%.
At this point in time, in October 2024, NatWest, for example, doesn’t take any haircut. They use 100% of the converted income. Santander are currently a bit more cautious and always use a 25% reduction on the income.
HSBC maintains a matrix of foreign currencies and usually takes between a 10% and 20% reduction based on the volatility of each foreign currency. On a more stable currency, it’s more likely to be 10%. If it’s less stable, it might be 20%. That does change and HSBC keeps that table updated.
The haircut means that you could absorb any unfavourable change to exchange rates. You’re still able to make your mortgage payments even if you’re receiving less versus the sterling equivalent.
How does my foreign income affect the amount I can borrow for a mortgage?
If you’re paid in foreign currency income, the amount of income used will depend on the exchange rate when you’re making the application and any haircut or discount applied to that, as we’ve just discussed.
Once the income figure has been determined, it’s locked in. That’s what we use. From there, the affordability assessment is the same as for any other mortgage application.
Lenders typically have two ways of assessing how much you could borrow. One is affordability-based, where they look at your net income and what committed outgoings you have each month. They use data from the Office of National Statistics to get estimated costs for a property in that area, for feeding a family of whatever size and how much you might spend on regular outgoings.
From there, they work out how much you have left over each month. They work backwards from that to calculate how much you could afford to borrow.
With foreign currency income, regardless of where you’re paying your tax, they will use the income as if you were receiving it and paying tax on it in the UK. Let’s say, for example, you’re based in Dubai, at a zero income tax rate. They still work out the net income as if you were paying tax in the UK. It’s less favourable in that regard, because you’d obviously have less income after tax in the UK than in Dubai. But they always use the UK situation, regardless of where you are.
So, that’s the affordability assessment. The second assessment is the ‘Loan to Income’ multiple. Every lender will set a maximum multiple, usually somewhere between 4.5 and 5.5 times income. The multiple varies between lenders and also depending on income and deposit.
That’s quite easy to calculate. Those are the two main assessments they do to work out how much you could borrow.
Can I combine a foreign and UK income to improve my mortgage application?
Yes, you could do this. There’s nothing stopping you having two sources of income in different currencies. Let’s say, for example, you’ve got a partner who receives their income in pounds sterling and you receive yours in foreign currency, that’s absolutely fine.
You might even have a second job. You might work overseas during the week and do other consulting work in the UK. That’s also fine. You might have investment income or rental income. We could use multiple sources of income on an application and it doesn’t matter whether or not they’re all denominated in the same currency.
Is there a minimum time I need to have lived in the UK to qualify for a mortgage with foreign income?
Not necessarily – Some lenders at this point in time in March 2025 that have no minimum residency period. In theory, from day one of arriving in the UK you could use your foreign currency income.
However, they will need to approve you on credit scoring. We’ve had some past cases where you might fit the policy, but on application there’s not enough history or credit footprint in the UK to make a decision.
It’s not bad credit, with missed payments or defaults. It’s just a lack of credit. They just can’t see enough history on you in the UK.
Having said that, we’ve had mortgage applications approved for people with a credit footprint of less than three months. There are ways you could strengthen your credit score upon arriving in the UK. So technically, there is no minimum time. It’s all just down to whether or not you pass the credit scoring with that lender.
In some cases, it might be possible to get an exception. If you’ve lived overseas they might be able to get a credit reference from your country of residence. If you could get that – and they would want it all formally translated – you wouldn’t necessarily need that time in the UK.
But in my experience of dealing with clients, it’s quite rare that someone wants to buy a residential property immediately. If you’re being relocated for work, for example, often your employer will pay your living costs for a certain period. That gives you time to get settled and work out where you want to buy.
We work predominantly with clients in London. That’s obviously a big place with lots of different ‘villages’ within it. You might want to explore and see where you actually want to put down roots.
So you could potentially do it immediately, but for most of our clients there are three to six months between arriving and actually buying a property.
Are there any restrictions on the type of property I can buy with foreign income?
It would just be standard lender policy. There’s no difference in the property types they accept, whether you’re buying using a mortgage in a foreign currency or sterling.
Can I use a UK guarantor to support my mortgage application with foreign income?
Guarantor mortgages don’t really exist as they used to. With some mortgages you could involve another party to help you – with what’s called Joint Borrower Sole Proprietor.
It’s where one person owns a property as the sole proprietor, and a joint borrower is named on the mortgage. It means you could use both incomes, but it involves a full assessment – again looking at income versus outgoings.
If that joint borrower already had a property in the UK, lenders would look at the mortgage on that, running costs, current credit commitments and if they’ve got any family to support. It’s treated as a normal mortgage application with two applicants, but just one of them owns the property.
There might be some benefit there if you’re a foreign national, for example, and you’re buying with a UK national or someone who has indefinite leave to remain in the UK. That does potentially open up more lender options.
Some lenders will use the residency status of the first applicant, so again, it might improve your opportunities. It might also improve affordability if they’ve got good income and relatively low outgoings.
The joint borrower would be liable for the mortgage but wouldn’t have any rights over the property – so they would need independent legal advice to make sure that they understand that. They’re committing themselves to this debt, but with no rights over the property.
If you could find someone willing to do that, it could potentially support the mortgage application.
Are there any additional fees or taxes I should be aware of when applying with foreign income?
Tax is not something we’re able to advise on. We’re not qualified to offer advice in that regard. On mortgage products, it depends on the situation. If we could put it through with a mainstream lender on standard products, the fees will be exactly the same as if you’re paid in sterling.
There might be some cases, such as if you’re based overseas where some lenders have an international product range, which do generally come with higher fees and potentially higher interest rates. It’s obviously a bit more work for the lender with more checks involved, so they charge you more.
But there are plenty of high-street banks that have good policies for foreign currency income and offer standard products. It all comes down to your specific situation.
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Can I apply for a joint mortgage if my partner has UK income and I have foreign income?
Yes, that’s absolutely fine. There’s no no problem with combining sterling income and foreign currency income. If you’re paid in foreign currency, it’s calculated using the exchange rate and any haircut is applied. That’s then the income they use for you and your partner’s UK income is taken as standard. It’s quite easy to do.
Can I use foreign savings or investments as part of my deposit?
Yes, absolutely. They might be your own savings or funds being gifted to you from a family member.
If the money is coming from overseas there are likely to be additional checks on how those funds have accumulated. Lenders might want bank statements going back three or six months to see evidence of it building up.
With gifted deposits, there could be additional requirements. It depends on the lender. With some it’s got to be from an immediate family member, while others are broader in who they’ll allow to gift you those deposits.
There are some exceptions. If funds are coming from a sanctioned country, such as North Korea, that won’t go down well and is unlikely to pass.
Do UK lenders require me to convert foreign income into pounds before applying for a mortgage?
There’s no need to convert the foreign income back into pounds. You could have that income in a foreign currency in an overseas bank account. The lender will want to see bank statements for the account that receives the income, but there’s no problem with it being in foreign currency or overseas.
The conversion for the affordability assessment is just done on paper, upfront, by the broker. We’ll look at what you’re receiving in that foreign currency income, convert it to sterling and apply any kind of haircuts the lender might add on. We’ll just put a note on the application explaining how we’ve come up with that conversion and the date it was done.
Will I need to declare my foreign income to UK tax authorities as part of my mortgage application?
We’re not qualified to advise on any tax affairs, so I can’t really comment on that. But we do have clients who are employed overseas. Their income is received overseas and they pay tax in that jurisdiction. Some UK lenders will accept that income for mortgage purposes.
If I plan to work abroad while owning a UK property, will this affect my mortgage eligibility?
It might limit the number of lenders you could use. Let’s say, for example, you own a property and you come to the end of your fixed rate deal. In the meantime, you’ve moved and are now working overseas.
There are lenders that accept that, but it’s a reduced pool. We have clients who work overseas and have UK property – they might be on secondment, spending a few months overseas for a fixed-term project. Others might work overseas during the week and come back at weekends, and their UK home is still their main residence.
You might have family in the UK – perhaps your partner and children are living permanently here and you’re working overseas. All of that is absolutely fine. We’ve got lenders that will be happy with that – including a decent amount of high street banks. You’re not massively restricting your options or needing specialist lenders that charge higher rates.
What happens if my foreign income stops and I become reliant on UK income? Can I change my mortgage terms or switch to a UK income-based mortgage?
Once you have a mortgage product, there’s no requirement for you to notify the lender. They’re happy to do their underwriting upfront – they can’t really account for changes during that mortgage term.
If you’ve got a mortgage ongoing and you’re now receiving UK income rather than foreign currency income, you could just use that to service the loan going forward. If you’re within a fixed rate and you want to make a change, penalties are likely to apply.
Most lenders have early repayment charges on fixed rate mortgages. But if you want a tracker rate, for example, that doesn’t have any penalties, there’s nothing stopping you from switching your mortgage to a lender that only uses UK-based income.
When you come to the end of a fixed rate and you’re looking to refinance, you could make any changes you want. If you’re now paid in sterling, you would have a broader range of lender options. You might find that you move on to more favourable terms.
What options do I have if my mortgage application is rejected due to foreign income?
We would look at the reasons why it’s been rejected and then look for alternative lenders. You might have made an application to a lender that just doesn’t accept foreign currency income, in which case that’s an easy fix.
It might be that the lender you’ve applied to has taken a haircut for your given currency, which is limiting affordability. You can’t actually borrow what you need because with the haircut applied, it’s deemed unaffordable.
In that case, we could look at lenders that accept that foreign currency income without a haircut to see if that improves the affordability. It all depends on why it’s been rejected and seeking alternatives.
Can I apply for government mortgage schemes if my income is foreign?
It all depends on the scheme, and what’s running at the time you’re looking to make a purchase. In my experience, if the administrators of the scheme are okay with your situation, the lenders will also be okay with it.
It’s like a Venn diagram. We need to find a lender that accepts the government scheme and also accepts foreign currency income. If we find one that does both, there’s no reason why you couldn’t go ahead. It all depends on the scheme that you’re looking to apply for.
Will lenders consider bonuses, commissions or irregular income from foreign sources in my application?
If the lender accepts foreign currency income, they will also accept income that’s variable. It’s treated the same as if you’re receiving variable pay in sterling.
For the most part, lenders use 50% of any variable pay like bonuses and commissions because it’s not guaranteed. They want to be prudent. Some lenders go higher, so it’s worth making those enquiries.
Essentially, that bonus or commission income will be converted in the same way. We convert it back to sterling, notifying the lender of the exchange rate and the date. We apply any necessary haircut on that income and any reduction they make on variable income – such as that 50%. We plug that income in and that’s what they will use.
Is my foreign pension income considered by UK mortgage lenders?
Yes, you could use pension income in foreign currency. It’s the same treatment as earned income. Again, they’ll look at the conversion, apply any haircut, and then use that income for their affordability assessment.
What happens if my visa or residency status changes during my mortgage term?
The lender will do their underwriting up front. It’s a snapshot in time to check they are happy with you at that point. Post completion, there’s not really much they could do.
It’s more about what happens beyond that. If you’re looking to refinance at the end of a fixed rate deal and your visa residency status has changed, that needs to be factored in. It will potentially impact what lenders we could use. That’s all standard policy.
If you’re with a lender and your visa status has changed, they will usually offer you a product transfer. There will be a new product that you could take. Perhaps your residency status won’t allow you to move to a new lender, but your existing provider will offer you a new product to move onto. It all depends on the lender and your situation, but there will usually be an option there.
Will UK lenders accept cryptocurrency income as part of my foreign earnings?
It’s a very specialist area, and not really one for the mainstream lenders. They’re just not comfortable with that. We have seen it work with some private banks. There’s obviously a lot of due diligence involved – to know how that income is generated and the likelihood of it continuing.
There’s also the question of how much of that income they’ll use to cover the volatility that could come with cryptocurrency income. There’s potential there, but it’s quite a specialist area. There’s going to be a bit more work involved in evidencing a track record and future performance.
We would need a more specialist lender that could dedicate a bit more time to the underwriting, use a bit more manual approach and make a judgement on it. It’s not going to be one for mainstream high street banks.
Using cryptocurrency gains as a source of deposit is something mainstream banks are coming to accept. But they will need evidence of how that’s been accumulated.
If it’s a pure investment and they could see the money you put in, the gains and the return, that should be okay. If it’s a bit murky, it’s probably not going to be accepted. Obviously there are anti-money laundering checks to make sure that it’s not been earned through any nefarious activity. It’s worth speaking to someone for a chat.
How can a mortgage broker help here? Have you got anything else to add?
It’s always worth speaking to a broker. It’s like any area – you want to speak to someone with good knowledge of it. You don’t know what you don’t know. A mortgage broker is going to be able to answer a lot of questions and point you in the right direction.
Knowledge of how lenders will treat certain income and how much they use for affordability is obviously very important. We generally keep ourselves updated, so we’ll know about any changes in policy from lenders. If that’s going to impact our clients, we reach out to them.
Rather than going direct to a bank, we look after everything. You’ve got one point of contact. It’s nice and straightforward. We manage all the admin of the application. No one likes life admin and we could take some of that off your hands.
We pride ourselves on our service and we only ever ask our clients for information we can’t get ourselves. We do as many checks in the background as possible, using data from the Land Registry on when you bought your house and what you paid for it, rather than you having to fill out forms. We take as much hassle out of it as possible.
It’s just like anything – get an expert on board and get them to do all the legwork for you. It makes life a lot easier.
PLEASE NOTE: YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
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