Some lenders will only lend foreign currency mortgages to those who are paid in that particular currency, for example if you work for a US Law Firm and earn your income in dollars, or a European company and you are paid in Euros.

Other factors that affect your eligibility for a foreign currency mortgage include:

• Whether you’re self-employed or not
• The currency you’re paid in
• The country the work is carried out in
• The size of the business you work for
• The account your income is paid into

Self Employed vs being employed

There are far more lenders on the market that are willing to lend to people who are employed rather than self-employed, and this is especially true for a foreign currency mortgage. This is due to the extra difficulty lenders face when verifying disposable income and calculating affordability. Another reason is the difference in tax systems across the world which means the lender has to understand another tax system to check if there are any tax liabilities you might face.

The currency you’re paid in

The currency you’re paid in will affect the number of lenders out there who are willing to lend to you. All UK lenders will consider income paid in sterling however there are fewer lenders out there who are willing to offer euro, dollar or yen mortgages.

The country the work is carried out

The country where you work/receive income will affect your eligibility for a foreign currency mortgage. For example, if you work in France, Germany or The Netherlands there’s a higher chance your mortgage would be accepted compared to if you work in Belize, Morocco or Bolivia. This comes down to the fact that they have strong, stable economies and lenders will have a better understanding of the EU’s tax system, fraud prevention and anti-money laundering requirements.

The Size Of The Business

The size of the business you work for can impact your mortgage application. A large multinational company based overseas with a strong reputation in the UK will improve your chances compared to a small startup. This is because large multinationals are less likely to put themselves or employees under any tax or revenue scrutiny.

The account you’re paid into

If the bank account your salary is paid into has branches in the UK this will improve the chances that your application will be approved. For example, you could be working for a Spanish business and your earnings are paid into a Santandar account. This is because lenders may consider this a lower risk as the bank has an understanding of both the UK and Spanish market and tax systems, as well as reliable audit trails of where the money is coming from.

The usual host of factors that affect your mortgage eligibility also impact your eligibility for a foreign currency mortgage. These include things like:

• Your credit score
• Employment status
• Total income
• Your regular outgoings

Otherwise the lender will expect you to do a job or have a level of expertise in the currency markets.

As a rule of thumb, foreign currency mortgages are favoured by higher net worth clients or more sophisticated borrowers who understand the mechanism and inherent risks of the currency markets.

After all, while the value of Sterling can go up against the currency your mortgage is being paid in, so it can go down, which can mean you pay considerably more each month on your monthly payments and in some cases end up owing more on your property than when you started!

Managed currency mortgages offer potential benefits over regular foreign currency mortgages. However, these should only be considered by people who can afford the financial implications of a permanent increase in their loan, if things don’t go to plan. This is because a managed foreign currency mortgage works by trying to “beat the market”. There are three main advantages to a managed foreign currency mortgage which are:

• Reducing the total sterling equivalent value of the loanThe goal of a managed currency mortgage is to reduce the total sterling equivalent value of your loan by switching between foreign currencies as they weaken against sterling. By reducing the total value of the loan there’s less to repay.
• Interest rate savings on your loanYou can reduce the interest rate on your loan by borrowing in a low-interest rate currency.
• Possible tax efficiencies and savingsDepending on your situation there are possible tax savings and efficiencies to be had with a managed currency mortgage. This is because the “profit” you make by reducing your loan value isn’t subject to the same tax as a normal investment might. However, we are not tax advisors so we recommend speaking to one to understand your personal tax implications.

Foreign currency mortgages require a professional adviser who has experience in understanding the needs of clients like you. Knowledge of how foreign currency lending works, the type of documentation lenders are likely to ask for as well as having the tenacity to negotiate the very best rates on your behalf are key.

Many of our brokers in foreign currency mortgages have been doing this since 1993 and have established relationships with Currency Managers and banks over the years which mean we can cut through the noise and obtain quick decisions which can be relied upon. This is essential in the high demand UK property market and especially in London.

Our advisors will guide you through the intricacies of the foreign currency mortgage market, being with you to help negotiate both the property price and your financial terms, as well as recommending trusted partners such as Property Finders, Surveyors and Solicitors.

And it doesn’t stop there. Our team will be on hand to smooth the whole process through to exchange, completion and beyond.