Specialist mortgages

Some borrowers have more complex borrowing needs. These are some of the more specialist mortgages that are available.

Expat Mortgages

Lenders generally consider expat mortgages to be higher risk due to the difficulty in assessing your financial stability. As a result, your choice of lenders and products will be restricted, and you should expect to pay a higher rate of interest than for a standard mortgage.

If your main source of income is earned overseas, it can be difficult for a lender to assess this accurately, due to fluctuating exchange rates. The lender may also find it hard to get relevant information to establish how secure your income is.

When applying for any type of mortgage, lenders will look at your credit score. For expats who may have lived abroad for some time, a credit history may not be available. The lender will therefore need to undertake other checks and you should be prepared to provide additional documentation.

It’s therefore important to get specialist advice if you are looking for an expat mortgage or expat buy-to-let mortgage.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of Buy-to-Let mortgages.

Foreign National

If you aren’t a UK citizen, you can still apply for a mortgage, although your choice of lenders and products will be restricted. As is the case when applying for a standard mortgage, the lender will check your credit history, so you should try and build up your credit score by opening a bank account, registering to vote and paying bills on time. If you have recently moved to the UK, it might take a while to build up a sufficient credit score before a lender will consider your application.

Sharia Mortgages

Home purchase plans which comply with Sharia law allow you to buy a home without paying interest.

The lender buys the property on your behalf and is the legal owner. You then make monthly payments to the lender which are a combination of rent, charges, and capital repayment. No interest is payable.

At the end of an agreed fixed term you buy the property from the lender for the purchase price they paid initially; you then become the sole owner of the property.

There are two types of Sharia mortgage:

  • Ijara or Ijarah: The monthly rent and capital payments are held by the lender to purchase the property at the end of the term, so your share of the property remains constant throughout the term.
  • Diminishing Musharaka or Musharakah: You and the lender own the property jointly, with separate stakes. The monthly rent and capital payments go to purchase more of the lender’s share. As your stake in the property increases and the lender’s decreases, your rental payment decreases.

Sharia mortgages are complex products that advice and since 2014 any lender offering these products must offer you an advised service. This involves an assessment of your finances and recommendation of a product only if is suitable and affordable. The advice also must assess whether a conventional mortgage is more suitable.