How UK mortgages work for overseas buyers: the main options, fixed and variable rates, deposits, and the costs to plan for.
Whether you are buying your first UK property, adding to a portfolio or buying through a company, the right finance shapes the whole investment. Here is what overseas buyers should know before applying for a mortgage in the UK.
What is a mortgage?
A mortgage is a loan secured on the property you buy. The lender, usually a bank or building society, registers a charge over the property and can take it back if the loan is not repaid. You repay the amount borrowed plus interest over an agreed term.
Ways to finance your purchase
- Cash purchase. No lender involved, which keeps the process simple and quick. You still need to show where the money comes from, as part of anti money laundering checks.
- International buy to let mortgage. A number of UK lenders and private banks lend to buyers who live abroad, usually through a specialist broker.
- Company (limited company) mortgage. Lending to a UK company set up to hold property, often called an SPV. Rates can be a little higher, but interest is treated as a business cost.
- Bridging finance. Short term borrowing to complete quickly, repaid when a mortgage or sale is arranged. It costs more, so it suits short periods only.
Fixed or variable rate?
- Fixed rate. The rate stays the same for an agreed period, often two or five years, so your payments are predictable. Leaving early usually means an early repayment charge.
- Tracker or variable rate. The rate moves with the Bank of England base rate or the lender's own rate. Payments can go down as well as up.
When a fixed period ends, the loan moves to the lender's standard variable rate unless you remortgage to a new deal, which most borrowers do.
Repayment or interest only?
- Repayment. Each payment covers interest and part of the loan, so the loan is fully repaid by the end of the term.
- Interest only. You pay only the interest each month and repay the loan at the end, often from a sale or refinance. This is common for buy to let.
Deposit and loan to value
Loan to value (LTV) is the loan as a percentage of the property value. If you buy a £300,000 home with a £75,000 deposit, you borrow £225,000 and the LTV is 75%. Overseas buyers typically need a deposit of 25% to 40%, depending on the lender, the property and your circumstances. A lower LTV usually means better rates and more lenders to choose from.
Term
Terms commonly run from 10 to 35 years. A longer term lowers the monthly payment but increases the total interest paid; a shorter term does the opposite.
What lenders usually ask for
- Passport and proof of address
- Proof of income, such as payslips, tax returns or company accounts
- Recent bank statements and evidence of the source of your deposit
- A credit history, which may come from your home country for overseas applicants
- For buy to let, an estimate of the expected rent
Off plan purchases
With a new build bought off plan, completion may be one to three years after you reserve. Most mortgage offers are valid for around six months, so the application is usually made closer to completion. Plan your deposit and payment stages with this timing in mind.
Costs to plan for
- Arrangement or product fees
- Valuation fee
- Broker fee, if any
- Lender's legal work, usually handled by your solicitor
- Early repayment charges if you leave a fixed rate early
How we help
We work with independent mortgage brokers who arrange finance for overseas buyers and UK companies, and our solicitors handle the lender's legal requirements alongside your purchase, so the two run on the same timetable.
This guide is general information, not financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage.
