Buying a home is a major milestone for any couple, whether it’s your first purchase or moving to a bigger home to start a family. But when one of you earns in a foreign currency, things can quickly become more complicated.
Our blog will walk you through what to expect when applying for a joint mortgage where one applicant earns in dollars, euros, or another currency. We give you the advice you need to make sensible decisions about your property journey.
Things to keep in mind:
- It’s not always easy to get a UK mortgage when one person has overseas income
- Some lenders accept foreign income for joint mortgages, but you may face stricter criteria
- Exchange rate fluctuations can affect how much you can borrow
- Joint applications are assessed on combined affordability
- Working with a specialist foreign income mortgage broker will help you get the best deal
Can you buy a property with a partner using foreign income?
It’s possible to purchase a property in the UK with a partner who has foreign income. However, not all UK mortgage lenders accept foreign currency income due to potential exchange rate fluctuations and difficulty verifying overseas earnings.
That said, several lenders consider foreign income, especially if it’s from a stable and well-documented source. Working with a mortgage broker experienced in foreign income mortgages can help you find suitable lenders and navigate the application process.
Overseas income can include:
- Employment income from overseas
- Foreign investment income
- Rental income from overseas property
- Self-employed income
What do lenders look for when couples apply for a mortgage using foreign income?
Lenders look at several factors when assessing eligibility for a foreign income mortgage.
Income documentation
One of the biggest challenges of getting a foreign currency UK mortgage is proving your income. Lenders like to see clear documentation that shows a stable income stream. This is how they verify foreign income, and it helps them determine your ability to keep up with mortgage repayments.
The documentation they usually ask for includes payslips from your employer, official tax documents from the country where you earn your income and whether you pay UK tax, bank statements showing income deposits, and details of employment terms.
If you’re self-employed, you may be asked to submit additional documents, such as business bank accounts and proof of ongoing contracts.
Currency risk
Foreign income introduces currency exchange risks. Lenders often apply a “haircut” to foreign income, discounting its value to account for potential currency fluctuations. For example, if you’re earning in US dollars, a lender might consider only 80–90% of that income when calculating affordability.
Source of overseas income
It can help if you work for a global brand or a well-known organisation, as this is generally viewed as more reliable from the lender’s perspective. Smaller, less established entities may be seen as higher risk as they are less predictable and may not offer the financial stability lenders require.
Employment type and location
The type of employment and the country where you earn the foreign currency can impact the lender’s decision. This is because lenders want reassurance that your income won’t suddenly drop.
Income from countries with stable economies and clear financial systems, such as Germany or Switzerland, is usually more favoured by UK lenders because they are more predictable, and lenders can weigh up the risks more easily. Plus, a permanent job offers more security and usually a more regular salary, which helps add to the lender’s reassurance.
UK residency status
You or your partner will need to be a UK resident with the right to reside indefinitely. If one of you is not a UK resident, this could limit the number of lenders willing to consider the application.
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Steps to take when buying a house together with foreign income
Take a look at some steps you and your partner can take to make the process of buying a house easier when one person has overseas income.
Gather your documentation
Gather together all of the documents that provide proof of your income:
- Recent payslips or income statements (usually 3-6 months)
- Tax returns from the relevant tax authorities
- Bank statements showing regular income deposits
- Employment contracts and documents confirming income details
- Self-employment documentation
- Proof of how much deposit you have
Assess your UK credit score
A strong UK credit history can really help when applying for a foreign currency mortgage. Both you and your partner should check your credit reports for any issues and work towards improving your scores if they need it.
If you’re a foreign national, you might not have a UK credit history yet, so you’ll need to start building one. The first step is opening a UK bank account. Having a registered UK address and getting registered on the Electoral Roll can also help you establish your UK credit score.
Account for exchange rates
Some high street lenders are more reluctant to approve foreign earnings for mortgage applications because of exchange rate fluctuations. They can directly impact how much a lender believes you can afford to borrow. If your income is in a volatile currency, lenders may reduce the amount they’re willing to count towards your application.
To protect themselves against sudden currency drops, some lenders apply a conservative exchange rate (one that is lower than the market rate) or apply a currency haircut (a percentage reduction to your income, usually 10-20%) to account for potential fluctuations.
For example, a £50,000 equivalent salary in US dollars might be assessed as £42,500 in the lender’s affordability checks.
It all depends on the market at the time you apply for a mortgage and the lender you use.
Seek specialist advice
If you’re unsure how yours or your partner’s foreign income could affect your mortgage application, it’s best to consult with an experienced foreign income mortgage broker like us. They will find lenders who accept common foreign currencies as well as more complex situations.
Looking for a mortgage as a couple with foreign income? Get in touch with Simmonds Mortgage Services
At Simmonds Mortgage Services, we understand the challenges of getting a UK mortgage when foreign income is involved. With our whole-of-market approach, we’ll guide you through the entire mortgage process and find specialist lenders who are best suited to your situation.
We work with many clients where foreign income factors impact eligibility and help them access better mortgage offers. Just take a look at how we helped our client get a UK mortgage based on foreign currency income from a pension paid in Euros.
Call us on 01184 693037 for a friendly chat about your personal circumstances.
Frequently asked questions about UK mortgages & foreign income
Is the mortgage application process harder for couples or individuals with foreign income?
Unfortunately, the process can be more challenging as not all lenders are willing to accept foreign income, and those that do tend to have pretty strict criteria. But you can get help. With proper preparation and specialist advice, you can access many lenders that happily provide foreign currency mortgages.
Will my foreign income be converted directly to GBP for mortgage affordability?
Lenders convert foreign income to GBP using current exchange rates. Be prepared, though, as they may apply a conservative rate or discount to account for potential fluctuations.
How long does my partner need to have been earning foreign income to be considered?
Ideally, you’ll need to have at least 3 months’ proof of earnings as a couple to be considered for a foreign income mortgage. However, if your you are self-employed, then you will need to provide more proof, potentially up to 3 years of earnings.
Will lenders use the full amount of my partner’s foreign income?
Not always. Due to currency risk, lenders may only consider a percentage of the foreign income when assessing affordability. This is known as a haircut. It can vary from zero to 20% on average.
Does the proportion of UK income vs foreign income matter?
Having a large deposit or a higher proportion of UK-based income can make the application more straightforward and may open you up to better interest rates.
