Published 4th March 2018 · Updated 29th August 2023 by Martin Alexander
If you want to purchase a property overseas, an international mortgage can allow you to do so. UK residents can purchase property all over the world. That being said, there are locations more popular in terms of investment, such as Europe, the USA and Canada. Mortgages overseas aren’t limited to these destinations and can be obtained in over 60 countries worldwide.
Each country has its own jurisdiction, so the method of buying property globally varies considerably. Some countries also prohibit non-residents from purchasing property.
Having a local advisor can ensure you’re not being defrauded. Furthermore, they’ll also provide you with clarity on what you’re purchasing. Trying to purchase a property overseas without a local advisor is extremely risky, and we wouldn’t recommend it in any case.
Will I need a UK credit report to buy property overseas?
Like mortgages within the UK, getting a mortgage overseas is subject to credit checks. That said, you won’t always need an active credit file within the country you want to purchase. Overseas lenders will assess your UK credit file and usually require applicants to have good credit.
Overseas mortgages are often difficult to obtain with adverse credit, but it is possible with lighter issues such as late payments and defaults. Some overseas lenders may require larger than average deposits because of bad credit.
Severe adverse credit issues such as repossession and bankruptcy may eliminate any chance of securing a mortgage overseas. However, it may still be possible if your credit issues are over six years old.
Will overseas lenders assess my income?
Overseas mortgage lenders will still need to assess your income to see if the loan is affordable. All lenders vary in how they make assessments, and each country will differ even further. Whether or not you want to buy overseas to migrate or purchase an investment property, lenders will still need evidence of your income.
If you require specific advice on how overseas lenders assess income, you can make an enquiry. There are many countries where you can purchase a property, so there are too many variables and endless possibilities.
What is Debt to income (DTI), and why is it important?
UK mortgages are assessed on income/affordability, credit scores and loan-to-value (LTV). Lenders will also need to consider other variables, such as outgoings and unpaid loans. Overseas lenders will generally make assessments using a similar model. Furthermore, they’ll also make an assessment of debt to income (DTI).
DTI is simply the ratio of debt to your income. This is important for overseas lenders as it provides them with clarity on whether a mortgage is viable. Lenders overseas have DTI limits and will only allow debt value to be a certain percentage of your income. European lenders usually calculate DTI on net income, whereas lenders in the USA can use gross income as a value.
Each country has its own DTI percentage. For instance, Spain currently has a DTI ratio of 35-40%, which will fluctuate depending on the LTV of your mortgage. This means 35% of your net income must cover your current expenditures. This is in addition to the mortgage you also want to take on.
How is the Loan to value (LTV) assessed overseas?
Overseas lenders will also assess the loan to value of your mortgage. You will typically require a deposit of at least 30% to purchase a property overseas, but this can sometimes be lower depending on the country itself.
For instance, the current maximum LTV in Spain is 60-70% for non-residents. The USA currently offers a maximum of 80% LTV mortgages for non-residents.
How to find a broker who can help with a mortgage overseas
Getting a mortgage in the UK can sometimes seem confusing, especially if you’re a first-time buyer. Applying for an international mortgage is even more complex as each country has its terms for mortgage approval. Utilising the expertise and experience of a broker based in the country you’re purchasing in is vital!
You can make an enquiry, and we’ll put you in contact with approved and credible advisors. The advisors will be based in the country you aim to purchase, providing you with reassurance and the help you need.
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About the author
Martin Alexander
Martin is a senior mortgage advisor who has held a CeMAP qualification for over 15 years while completing an MBA in Global Banking and Finance.