Almost two-thirds of mortgage brokers identify proving overseas income and affordability as the biggest obstacle when arranging mortgages for expatriate borrowers, according to research from Suffolk Building Society.

The survey found that 62% of intermediaries struggle with assessing income using overseas payslips and tax returns, underlining the additional complexities involved in lending to British nationals living or working abroad.

Global political instability, uncertainty surrounding lender criteria and identity and anti-money laundering checks were also significant concerns, each cited by 48% of respondents.

The research suggests that a lack of borrower awareness is another barrier. Brokers estimate that just 34% of expatriates realise they need a specialist expat mortgage rather than a conventional UK home loan.

BROKERS PLAY KEY ROLE IN LENDER SELECTION

Finding a lender prepared to accommodate an applicant’s particular circumstances was identified as the area where intermediaries provide the greatest value, with 88% of respondents selecting this option.

Factors influencing lender selection include the borrower’s country of residence, tax arrangements and the currency in which they receive their income.

More than half of brokers (54%) said they add value by helping customers distinguish between different mortgage products, including expat buy-to-let, consumer expat buy-to-let, holiday-let and residential mortgages.

A further 44% highlighted their role in explaining documentation requirements and helping borrowers understand why an expat application can involve greater scrutiny than a standard UK mortgage.

Charlotte Grimshaw, head of intermediaries at Suffolk Building Society, said the range of people requiring expat finance was considerably broader than commonly assumed.

She said: “There’s a widely understood idea of what an expat looks like, perhaps a lawyer or finance professional who has moved to Dubai. But the reality is much broader. Those working for a UK company but based overseas, and under their local tax jurisdiction, would count as an expat.

“As might someone working on an oil rig, in shipping, or as crew, or at the UK overseas embassy, which can be a surprise if they’re new to living or working overseas.”

PROPERTY USE INFLUENCES MORTGAGE CHOICE

The findings also point to the importance of establishing how a borrower intends to use a UK property before recommending a mortgage product.

An expatriate purchasing a property for permanent letting may have different financing requirements from someone seeking accommodation for occasional visits to the UK or for family members.

Grimshaw said: “Even when clients know they need an expat mortgage, understanding which type of product is most suitable isn’t always straightforward. Whether they plan to let the property permanently, use it themselves when visiting the UK with flexibility around letting, or it’s to be a home for themselves/family members, this all influences the type of mortgage they may need.

“For example, we’ve had brokers come to us looking for a buy-to-let, but after talking through the case, their clients have opted for the added flexibility that a holiday let can bring.”

With an estimated five million British expatriates living overseas and around 250,000 having left the UK during the past 12 months, the society believes specialist expat lending presents opportunities for intermediaries prepared to develop expertise in the sector.

Grimshaw added: “Expat lending is a great example of where broker advice makes a significant difference. While rate, LTV and income multiples may be the core considerations when dealing with a standard residential case, the value that brokers add to an expat case goes far beyond these.

“It’s not simply about navigating what can be a more complex application process and documentation requirements. It’s about identifying the right type of mortgage, anticipating potential obstacles and directing the case towards an appropriate lender from the outset.”