"If you’re a broker and expat mortgages aren’t on your radar yet, now’s the time to get them there."
Whichever side of the political fence you sit on, headlines about an ‘exodus’ of high-net-worth (HNW) individuals relocating overseas have been hard to miss.
If reports are accurate, we could see a rise in HNW borrowers moving to countries such as Dubai for fear of tax increases – which could in turn, represent a growing opportunity for brokers and expat mortgages.
Even before the general election results, research from investment migration firm Henley Global, released in June, forecasted a net loss of 9,500 millionaires from the UK in 2024. This figure is more than double the 4,200 who left the country last year, which the advisory firm says was itself a record-breaking number following the departure of 1,600 HNW individuals in 2022.
The report reveals that for the third year running, the United Arab Emirates (UAE) is the world’s top destination for wealthy individuals, with 6,700 moneyed migrants expected to make the Emirates their home by the end of the year, significantly driven by large inflows from the UK and Europe.
Zero income tax, golden visas, and a luxury lifestyle are a few of the reasons cited for the attraction of the Emirates - and not forgetting the weather. The Henley Private Wealth Migration Report 2024, states that London in particular is set to lose out on millionaires.
For those HNW individuals who are UK citizens but are relocating for work — or simply for a better lifestyle — many will look to retain a connection to the UK, often through property. This makes it a good idea for brokers to familiarise themselves with how expat mortgages work or to refresh your knowledge if you are new to expat mortgages or haven’t advised on one in a while.
Different types of expat mortgages
Expat mortgages fall under three main categories: residential, buy-to-let, and holiday lets.
Residential expat mortgages are designed for expats whose families might be staying in the UK or for those who know they will be returning and want to keep their family home ready and waiting. This type of mortgage allows immediate family members to stay in the family home, which is especially useful for those studying at university. They might also not want to sell the family home for sentimental reasons, and it also means they have a place to return to when visiting the UK, avoiding the need to stay in a hotel.
For expats who will be away for a longer time, a buy-to-let mortgage might be more suitable — either for their family home or for a new investment — either way, generating rental income while potentially helping to pay off the mortgage on their UK home while they are away.
If the family home, or a new property, is located in or near a popular holiday spot, a holiday let mortgage could offer the best of both worlds. This type of mortgage requires expats to make the property available for rent to holidaymakers for a set number of days per year. This not only provides additional income but can also be used by returning expats during their trips back to the UK when not in use as a holiday home.
Whether an expat is looking to maintain a family home, invest in rental property, or acquire a holiday let, there are mortgage options available to help them maintain homeownership in the UK while living abroad.
How expat mortgages differ
Just like UK-based borrowers, expat borrowers will need to meet the same affordability checks and prove their ability to repay the mortgage. We see a high number of HNW expat borrowers, which can mean they have a more complex income structure which requires a more personalised approach to underwriting.
The other main difference is that their income and documentation may be in a different currency and language. However, this shouldn’t be a stumbling block, as many lenders, including ourselves, consider applicants residing in almost any country and earning in various currencies. We are experienced in handling documentation from all over the world. Naturally, the documentation might look a little different, but the principles remain the same.
Expat mortgages arranged through UK-based brokers also fall under the same Financial Conduct Authority (FCA) regulations as UK mortgages, so there is no need to worry about complying with another country’s mortgage regulations.
While not all of the 9,500 millionaires expected to exit the UK this year will be UK citizens, some will be — which means we could see further demand in the already growing expat mortgage market. If you’re a broker and expat mortgages aren’t on your radar yet, now’s the time to get them there.
