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Our Case Studies » How does receiving income in a foreign currency affect your mortgage?

How does receiving income in a foreign currency affect your mortgage?

Can I get a million plus remortgage?

One of the most basic requirements when looking for a mortgage is the ability to prove your income. However, if you live abroad and earn in a foreign currency, it can affect your ability to borrow money for a number of reasons. Sometimes there are restrictions around transferring money between jurisdictions, on other occasions it can be as simple as a lack of proof of income. Some tax-free locations don’t have an HMRC equivalent and many countries don’t provide employees with pay slips. Therefore, lenders lack the basic information they need to make decisions.

Having specialised in this field for a number of years, our team are well-versed in knowing the different solutions on offer in this specialist market, and the different ways of getting around some of the most common obstacles.

Case profile

In the case of one of our recent clients, they were UK nationals living in Eastern Europe. They had decided to sell their main UK home and buy another for the family to live in when they eventually returned to the UK. Our client was paid in a mixture of local currency and GBP, which is not unusual when working for a multi-national corporation. One of the main obstacles was that they didn’t have pay slips to prove income, specifically the split between the local currency and sterling.

Solution

Our Associate Director, Paul Fredericks, approached a lender who he knew would take a flexible approach to the case. The lender agreed to take into account the last three years’ income across both currencies, backed up with a reference from the client’s employer. Additionally, the lender agreed that the client could rent the property out for up to 24 weeks per year, allowing supplementary rental income.

Deal Highlights

Loan amount:
£654,875
Rate:
3.89% fixed for 2 years
Loan To Value:69%
APRC:Overall cost for comparison 5.50% APRC representative variable
Term:27 Years
Type:Repayment
Loan purpose:Purchase
Lenders arrangement fee:0.75% of loan amount
Early repayment charge:
3% of the outstanding loan amount in the first 2 years

Overall cost for comparison 5.50% APRC representative variable based on 24 monthly payments at a fixed rate of 3.89% followed by 300 monthly payments at the lenders variable rate, currently 5.49%. Total amount to be repaid is £1,238,773.12. As the mortgage rate is not fixed for the duration of the loan this amount is illustrative and may vary as a result of variations in interest rate.

Because part of the loan is a variable interest rate loan, the actual APRC could be different from this APRC if the interest rate for your loan changes. For example, if the interest rate rose to 10.74%, the APRC could increase to 11.60%. The actual rate and product available will depend upon individual circumstances and may not be available to everyone. Ask for a personalised illustration. 

Your home or property may be repossessed if you do not keep up repayments on your mortgage.

Changes in the exchange rate may increase the sterling equivalent of your debt.

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