Expat clients often assume that buying a UK home to live in part-time and let the rest of the year only leaves one route open: a holiday let mortgage. The case below shows why that isn’t always true, and why asking the right question at the outset can change which lending category a case falls into altogether.
The client
Nine years in Dubai, no UK property, and a family who kept asking when he was coming home.
James is a British national in his early forties, employed on a permanent contract by an engineering consultancy in Dubai and paid in dirhams. He had been out of the UK for nine years. He had a strong income and a deposit built up steadily over the last four of them, but not a single UK property to his name.
What he wanted wasn’t complicated to describe, though it turned out to be surprisingly hard to buy.
A three-bedroom cottage in a coastal village in North Devon, near where his parents had retired. Three weeks at Christmas, a fortnight in the summer with his children, and whatever unplanned trips a family two thousand miles away eventually requires. Let out to paying guests the rest of the year so it wasn’t simply sitting there costing him money.
And, at some point within the next decade, somewhere to come back to.
He had already spoken to two other brokers. Both had taken him down the same path.
The position on arrival
What he had already been quoted
By the time he reached us, James had a holiday let illustration in his inbox and a set of assumptions he’d accepted as simply how this works.
| What he had been told | What it meant in practice |
|---|---|
| Sixty nights a year, contractual | Christmas and the summer alone would have used most of the allowance. A funeral, a wedding or a parent in hospital would have taken him over it. |
| Seventy-five per cent loan to value | A twenty-five per cent deposit on a £425,000 purchase is £106,250, before stamp duty, legal fees and the surcharge. |
| Income converted and discounted | His dirham salary converted to sterling and then reduced by twenty per cent to absorb currency risk, on top of a minimum earned income requirement he had to satisfy separately. |
| Holiday let pricing | The expat premium and the holiday let premium stacked on top of one another, on an investment baseline that starts higher than residential pricing to begin with. |
He hadn’t been badly advised so much as narrowly advised.
Every product he’d been shown was an investment product, because he’d used the phrase “holiday let” in his first sentence and the conversation had followed the word rather than the intention behind it.
The turn: one question changed the entire structure
The first call lasted twenty minutes, at nine in the evening UK time to suit his clock. Most of it covered the usual ground: country of residence, currency, length of service, deposit source, property type.
Then came the question that decides everything downstream:
is this primarily a home you will eventually live in, or primarily an income asset?
He answered it in about two seconds. It was a home. The letting was how he intended to stop it costing him money in the meantime, not the reason for buying it.
That answer moved the case out of the holiday let category entirely and into expat residential lending.
Here the lender’s starting assumption is that the property is his, and short-term letting to non-family guests is a permitted use rather than the business case.
What we did: lender selection, then packaging
There were three things this case needed, and only a small number of lenders offer all three at once.
A permitted use position rather than a night cap
The building society we placed the case with treats the property as the client’s own, with short-term letting to non-family guests expressly permitted and no fixed personal use allowance. The condition is a genuine intention to retain it for his own use, and the exclusion of all letting income from affordability.
Assessment in dirhams
Income and expenditure were declared in the local currency rather than pre-converted by the applicant, with no percentage haircut applied to foreign earnings. On this case alone, that was the difference between a maximum loan that worked and one that didn’t.
A loan to value above the investment ceiling
Expat residential lending has moved beyond the 75% LTV that investment-led holiday let products generally top out at, with maximum loan sizes tiered as the loan to value climbs.
The criteria check was done before anything was submitted. One credit search, at the point the case went to a lender that had already confirmed it was comfortable with the shape of it.
The paperwork was where the real work sat.
Expat files fail on documentation far more often than on affordability. This one needed his employment contract and a translated schedule of allowances, six months of overseas payslips reconciled to his bank statements, a UK correspondence address at his parents’ house, deposit evidence showing the funds held and seasoned in a UK account, and a UK solicitor instructed to accept legal service.
Three of those items came back from the underwriter for clarification.
None of them delayed the offer by more than a few days, because they’d been anticipated in the original submission.
The numbers: the same house, two structures
| Holiday let route | Expat residential route | |
|---|---|---|
| Purchase price | £425,000 | £425,000 |
| Maximum loan to value | 75% | 80% |
| Deposit required | £106,250 | £85,000 |
| Affordability basis | Projected letting income, stressed | Salary, assessed in dirhams, no haircut |
| His own nights | 60, contractual | No fixed cap |
| Rate position | Expat premium plus holiday let premium | Expat premium only, on a residential baseline |
| Letting income counted? | Yes, it is the case | No, excluded entirely |
£21,000 less deposit needed, a lower rate on the offer letter, and no night count. The trade he made for it was giving up the ability to borrow against the rent. On his salary, that was the easy half of the bargain.
Related reading: Expat holiday let mortgages: how many nights can you stay?
The outcome: offer in five weeks, completion in nine
The decision in principle came back within 48 hours of submission. Valuation was instructed the following week and came in at purchase price.
The formal offer was issued five weeks after the first call, and the purchase completed nine weeks after it, with a three-hour time difference and a client who was on site for two days of the process and in another country for the rest of it.
He spent the following Christmas in the house for three weeks. Nobody counted them.
The product end date is diarised, and he’ll hear from us well before it, rather than discovering a reversion rate from four thousand miles away.
When this route isn’t the answer
This structure suited James because of what he actually wanted the property to do.
It wouldn’t suit a different client with a superficially similar enquiry.
- If it’s genuinely an investment and there’s no real intention to use it, the residential route isn’t available. The intention to retain is a condition, not a form of words.
- If the salary won’t carry the loan on its own, the holiday let route exists precisely because it lets the rent do the heavy lifting.
- If it needs to sit in a limited company or SPV, the residential route is a personal name product by definition. Corporate structures live on the investment side of the market.
- If it’s the first of several, a portfolio is investment lending and should be structured as such from the outset.
Frequently Asked Questions
A holiday let mortgage assesses affordability mainly on projected rental income and usually caps how many nights a year you can stay yourself. An expat residential mortgage assesses affordability on your salary, treats the property as your home, and typically allows short-term letting to non-family guests without a fixed personal use limit.
Yes, if you can show a genuine intention to use the property as your own home rather than purely as an investment. Lenders will look at your income, deposit source, employment history and the reason you’re buying, not just where you currently live.
It depends on the lender and product. Some lenders convert foreign income and apply a haircut to account for currency risk. Others, including the lender used in this case, assess income in the original currency with no reduction. This can significantly affect the maximum loan available.
Lenders categorise mortgages by primary purpose. If a property is primarily an income-generating asset, it falls under investment or holiday let criteria. If it’s primarily a home you intend to use and occasionally let, it can qualify for residential criteria instead, which often comes with a higher loan to value and better rate.
Related reading: Moving Back to the UK: Your Expat Mortgage Explained
This depends on the lender, the loan to value available, and whether the mortgage is assessed as residential or investment. In the case above, the residential route required a 20 per cent deposit compared with 25 per cent under the holiday let route on the same £425,000 purchase.
Some residential mortgages permit short-term letting to non-family guests as a secondary use, provided the property remains genuinely intended as your own home. This is different from a dedicated holiday let mortgage, where letting is the primary purpose of the loan.
Typically an employment contract, recent overseas payslips reconciled to bank statements, deposit evidence showing funds held and seasoned in a UK account, a UK correspondence address, and a UK solicitor able to accept legal service. Exact requirements vary by lender and individual circumstances.
Every case depends on your income structure, country of residence, credit history, deposit source and what you intend to use the property for. Speak to a whole-of-market broker who can assess your circumstances individually rather than assuming a single product route.