Foreign income mortgage may have ‘haircut”.
To get a foreign income mortgage: consult a specialist
Often a foreign income mortgage is a showstopper for most high street lenders. However, there are a few lenders that are more pragmatic.
Bonus in home country’s currency
A foreign income mortgage may seem like a niche thing which doesn’t apply to you. However, if you work for an overseas company, and your bonus is worked out in the home country’s currency, you can trip over this rule.
We see this a lot with people working for the large US banks and Tech firms. Again, there are lenders that take a view, but do not be surprised if a ‘haircut’ is applied to safeguard the lender against currency fluctuations.
So, in a simple example.
- Bonus of $100,000 is paid.
- A lender applies a 20% ‘haircut’. Leaving $80,000.
- The income is then converted to Sterling. For the purpose of this example, we’ll assume $1.2 to £1.00.
- Meaning they add £66,666 (80,000/1.2) borrowing requirement to the application (and please bear in mind the page about large bonuses).
All income in non-UK currency
If all of your income is in a different currency, lenders often require this to be paid into a UK account.
Again, the lender will apply the haircut above for the same reasons. So not a problem, but you do have to be very careful which lenders to approach.
The lender will still need you to provide suitable proof of income to assess affordability for your foreign income mortgage.
We can advise you on which lender is the most appropriate for you. This depends on the level of borrowing you are looking for. We work for you to present your case to the most suitable lender for a positive outcome for you and your family.
How We Can Help
As you can see above, the more complex the income, the more help you often need to be approved for a foreign income mortgage.
We specialise in this area, so would encourage you to speak to one of the The Team just to see what your options are before progressing too far with an application. This will ensure you get a smooth experience when applying for your foreign income mortgage.
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