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International mortgages

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International mortgages

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Last reviewed on 11th April 2021

If you want to purchase a property overseas, an international mortgage can allow you to do so. Although the majority of our specialist advisors are based in the UK, we do have advisors based overseas.

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. International mortgages 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 on an international scale can vary quite considerably. Some countries also prohibit non-residents to purchase 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.

UK credit report

Similar to UK mortgages, getting an international mortgage is subject to credit checks. 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, but if your credit issues are historic, it may still be possible.

Income for an international mortgage

Overseas lenders will still need to assess your income to see if the loan is affordable. All lenders vary in terms of 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, then you can make an enquiry with us. As there are so many countries you could purchase a property in, there are simply too many variables and the possibilities are endless. By making an enquiry, our advisors are able to understand your situation and can better inform you further.

Debt to income (DTI)

UK mortgages are assessed on income/affordability, credit scores and loan to value (LTV). There are other variables, such as outgoings and unpaid loans that lenders will also need to consider. 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 do 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% and will fluctuate depending on the LTV of your mortgage. This means that 35% of your net income must be enough to cover your current expenditures. This is in addition to the mortgage you also want to take on.

Loan to value (LTV)

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.

The current maximum LTV in Spain for instance is 60-70% for non-residents. The USA currently offers a maximum of 80% LTV mortgages for non-residents.

International mortgage brokers

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 own 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’re aiming to purchase in, providing you with reassurance and the help you need.

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About the author

Mortgage Advisor | More Articles

Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.