What is the definition of foreign income?
- Income which is not paid in Pound sterling
- Bonus may be paid in foreign currency e.g. US dollars
- Income received from abroad
Your Borrowing = 4.5 to 5.5 x your income
- A ‘haircut’ will be applied to cover currency fluctuations
- Work out your income in home currency and convert into sterling
- Then reduce by between 10% and 20%, typically around 15% depending on lender
Foreign income mortgage qualification
Getting a mortgage with foreign income – some factors
- Employer’s credentials e.g., size, location, sector
- Employee’s credentials e.g., length of employment, type of work, employed or self employed
- Currency in which income paid and where income received
- Country of work
- Country where tax paid
Foreign income mortgage ‘haircut” examples
Income in non-UK currency
- Income $100,000
- Convert back into sterling e.g. 1.4 exchange rate =£71,000
- Haircut of 15% = £60,000
- £60,000 x 4.5 = £270,000 borrowing
Bonus income in non-UK currency
- Bonus of $100,000 is paid.
- A lender applies a 20% ‘haircut’. Leaving $80,000.
- The income is then converted to Sterling. For 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 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 and your foreign income mortgage qualification. 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.
If you have any income which is non-sterling speak to a broker at the outset because lender criteria differs considerably. We want to ensure you get the right outcome, without wasted effort and delay.
We can advise you on
- Getting a mortgage with foreign income.
- Your foreign income mortgage qualification.
Essential to talk to a foreign income mortgage specialist
- Depending on your mortgage goals, it really is essential to talk to a mortgage advisor that has access to the whole market, when working out a mortgage from overseas income.
- Your bank of many years that you know and love, through changes in ‘mortgage affordability’, may not offer you the best terms or loan amount when seeking a foreign currency mortgage in the UK.
- It makes sense to look over the fence to what else is available and a mortgage specialist is your best and easiest way of doing that.
- We have access to lenders, products, and underwriters that the general public simply do not.
Your foreign income mortgage structure
One of the first things to consider is your repayment vehicle.
Do you want to opt for?
- a repayment loan?
- an interest only loan?
- part & part which is a combination of the two?
What is a Repayment mortgage?
- You make monthly payments and at the end of the term the loan is repaid.
- With a repayment mortgage the monthly payments are higher but with less risk.
What is an Interest Only mortgage?
- You simply pay the interest on the mortgage loan and look to pay off the loan later with say, the sale of property, investments, or bonuses.
- With an interest-only mortgage the monthly repayments are lower but is assessed as higher risk.
Your mortgage from overseas income product
You will also need to consider which type of mortgage product is best for you as this determines your monthly payments.
- Fixed Rate Mortgage. Your repayments are set for 2,5, 10 years.
- Variable mortgage. This is sometimes cheaper, but the rate can go up or down depending on the market and is often penalty free if you want to remortgage.
Rather than asking how much it will cost, consider how much can you afford.
Your mortgage specialist will then structure your mortgage appropriately, based on your risk profile.
What foreign currency mortgage UK rates can I get?
- The actual mortgage rates you will be offered will be dependent on your personal circumstance and deposit level. Your broker will advise you on mortgage deals for you.
- Therefore, think about how much you want to spend each month on your mortgage repayments
- Only brokers have access to a range of lenders in the market, and we have access to exclusive mortgage rates.
How much deposit do I need?
- The long answer is that it is dependent on your circumstances: purchase price, income, and property type.
- The short answer is – about 5%-10%.
- Lenders purely take a risk-based approach to pricing, meaning from a starting point of a 5% deposit, every additional 5% deposit you put down increases the range of lenders you can choose from and therefore decrease the cost of the loan as you are determined as lower risk.
- Lenders consider you a low-risk buyer when you put down a 25% deposit or more.
- The last key figure is a 40% deposit. Once you have a 40% + deposit you get the very cheapest pricing available and very often the exceptionally low rates you see on best buy tables.
We are here to help you with foreign income mortgage deals.
As a top-rated mortgage broker, we are here to guide you on every step of your journey.
- Your dedicated mortgage broker will provide you with detailed, personalised advice on how much you can borrow and source exclusive mortgage deals when advising you on your foreign income mortgage qualification.
- In today’s mortgage market, each borrower is assessed on their individual affordability merits. Once we have talked through your personal circumstances, we will advise you on mortgage interest rates for you.
- This means you get the right advice crucial to ensuring you get the right mortgage for your circumstances.
- Rose Capital Partners takes the time to understand your mortgage goals to secure the optimal mortgage deals for you.
- Our mortgage advice is second to none. We will advise you on mortgage interest rates appropriate for you.
- Our aim is to maximise your borrowing potential, minimise your monthly payments and work with you throughout the lifecycle of the loan to manage down the mortgage.
- You are treated as a valued client, not a transaction, and dealt with by an experienced, empathetic person, not an algorithm.
- We have access to competitive deals and with no affiliation to third parties.
- We will always act in the best interests of you, our clients, to give you the best mortgage advice possible to achieve the right mortgage for your life’s goals.
How We Can Help