Mortgage Implications of Working Overseas

Posted on 24 May 2010 by Leanne


I have a joint mortgage with a friend on a 2 bed flat.  I am thinking of moving overseas to work in the next year or so. If this happens my co-buyer would stay living in the flat and we would rent out the second room to cover most of my share of the mortgage.  I would be earning a regular salary overseas and my work contract would initially be for one year, but if the possibly to stay longer arose I may choose to take it.

I have a few questions about this with regards to our mortgage.

  1. Would it be necessary to inform the mortgage company that I am temporarily living away from the flat and is this likely to incur any penalty to us mortgage-wise?
  2. What would happen if we need needed to remortgage the flat whilst I was living away (we currently have a fixed term rate which we are likely to renew in the next few weeks)?  Would they take into account the rent we get from the second room, or my overseas salary, or both?
    Again is this likely to lead to less favourable mortgage terms or some kind of penalty?

Leanne

If you take a look at the Mortgage Conditions booklet that was issued with your mortgage offer, you will see a section referring to any changes in your circumstances and saying that you must advise your Lender. In theory, if you don't you would be in breach of your contract and the Lender could seek a Court Order to repossess the property. In practice, this is highly unlikely unless there has been some other breach, such as the mortgage payments not being met.

That said, I would recommend that you have a hypothetical discussion with your Lender along the lines of what if I was to work overseas for a year or more? You could then ask them directly how it would effect the mortgage and if there were any penalties or costs involved should you go ahead.

If you wish to remortgage and you are working abroad at the time, it will severely restrict the number of Lenders who would be willing to consider an application from you. Those that do, will take your overseas income into account, but probably not the income from renting from the second room. However, there are still some very respectable mortgage deals available if you fit their criteria.

I recommend that you speak to your current Lender and then to an independent Mortgage Broker about your situation.

Finally, I recommend that you check with your buildings and contents insurers to see if there is any action you need to take to ensure that cover is maintained in your absence.

Peter

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