The simple answer to this common question asked by British Expats is "No". It is not essential to have a UK credit history in order to raise a UK mortgage.
Having a current or previous UK credit history is not a pre-requisite to obtain a UK mortgage, however in certain circumstances it can allow an expat to secure more competitive and flexible mortgage terms than those on offer by an offshore or international lenders whom generally do not require a credit check.
Stuart Marshall, Business Development Director of Liquid Expat Mortgages, provides an insight into this often misunderstood issue. He also provides several examples of how a UK credit history can help, as well as ways an expat can improve their UK credit history whilst living and working overseas.
If you are a British expat or foreign national looking to invest in a UK property with the need of a mortgage, then it is NOT essential that you have a credit history or report in the UK. The key reason for this is because most UK and offshore lenders only require your address history for the last three years. Many expats have been working overseas for at least this length of time, therefore the finance companies are not able to run a credit check through the likes of Experian and/or Equifax. Obviously foreign nationals whom have never resided in the UK do not have a historical credit file, and the appropriate offshore banks and lending institutions recognise this fact in their application and underwriting procedures. Liquid Expat Mortgages has helped hundreds of clients from all corners of the globe secure UK Mortgages whom have either never lived in the UK or have been expats for many years and have no current or recent connections with the UK. The mortgages arranged for expat clients are both buy to let, main residential and self-build mortgages.
The UK credit history and report does become an important consideration when an expat has lived in the UK at any point in the last three years, and they are looking to secure a more competitive deal from a UK lender, as opposed to an offshore lender. Moreover, many expats may still have an existing UK address they continue to keep as their banking correspondence address, and as such, allow UK lenders to credit search them at this location and fulfil the lenders credit scoring procedure. Many expats keep their parents address as a UK banking address for their correspondence. This helps clients whom are wanting to get back on the UK property ladder and are looking for lenders whom do not impose a minimum £100,000 loan amount and mortgage deals that do not have bank arrangement fees of 1%, which many of the offshore and international banks charge.
The UK providers of mortgages whom can often make the application process much quicker for expats looking for either buy to let or main residential mortgages are more likely to have lower arrangement fees, more competitive interest rates and a wider choice of availability of fixed rate and tracker mortgages.
Three quick tips on how an Expat can create and improve their UK credit score
1) Either maintain a UK address for banking correspondence or reinstate one back in the UK, e.g. your parents address back in the UK. This allows a UK lender to credit score your application at a UK address and broadens the available mortgage options to you.
2) Before you apply for UK credit, get a copy of your credit file from either Experian (www.experian.com), Equifax (www.equifax.com) or CallCredit (www.callcredit.co.uk). All three offer instant access to your statutory £2 credit report online. You simply need to complete an application on their websites and you will instantly have access to your credit file. Once you have reviewed, feel free to forward this to your mortgage broker so they can understand any potential issues they need to consider before applying.
3) Dealing with any late payments or previous CCJ’s. If as an expat you may have missed a payment due to relocation or re-organising your finances when living overseas, then you can apply for a ‘notice of correction’ to be applied to your credit report. This is a 200-word statement which explains why payments were missed. For example, they have always met repayments on time in the past but moving or working overseas meant they had a period when their hectic life meant one or two repayments got missed. You will need to explain that now that you are settled working abroad, all financial commitments for repayments are in order and back up to date.
Liquid Expat Mortgages strives to simplify the process of raising finance whilst providing the largest choice of available mortgage products and lenders that are totally familiar with expat lending requirements and circumstances. Its clients have used its services to access UK and Overseas mortgage lenders for amounts ranging from £50k to over £5m to purchase Buy to Let, Investment Property, Main UK and Overseas Residences. Liquid Expat Mortgages can provide access to over 40 different lenders who are willing to accept applications from British Expatriates and Foreign Nationals looking for UK and Overseas Mortgages. For more information, contact Stuart Marshall.
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