The easy way to get a UK mortgage as a US citizen

It has been a decade since the Obama administration changed the tax laws for US citizens living overseas, but it doesn’t have to stop you getting a British bank on your side. Simon Gardiner, Senior Private Banker, explains why a bespoke banking service can make all the difference.

When working or living abroad for a prolonged period, a key aspect is having a reliable financial services partner. You will almost certainly need a bank account for salaries and payment services. You may want to discuss savings, personal loans or even options for arranging a mortgage, if a property purchase is on the cards.
Yet, as anyone who’s ever lived abroad for an extended period can attest, opening a bank account can be difficult when you have only a limited local address history and a pocketful of ID issued through foreign bureaucracy. It certainly can be tricky for US citizens – and all because of tax regulations.

Tax Regulations

The US is relatively unusual in that US citizens and those with dual nationality are taxed on their global earnings, regardless of where they live. A decade has now passed since President Obama signed the Foreign Account Tax Compliance Act into law in an effort to clamp down on tax evasion by US citizens with overseas earnings. Better known simply as FATCA, among other things, the Act, which came into force in 2014, places an obligation on overseas financial institutions to look out for US clients and to report their assets and identities to the US authorities.
As a result, taking on US clients has meant added compliance requirements, costs and potential risks for financial services companies in the UK. In turn, this has meant that many of them simply no longer provide these services to US citizens, regardless of how long they may have been resident in the UK. Others insist that they will only take on US clients who can provide them with a certain minimum level of business. The costs involved have been deemed too great, given the relatively small group of people affected.

It is not just US legislation that has caused a headache for US citizens living overseas. In 2015, the EU’s Mortgage Credit Directive made it harder for non-residents to apply for mortgages. While not aimed specifically at US citizens, the directive affects loans taken out in a foreign currency. In this case, even sterling mortgages are classified as being foreign currency mortgages if the holder is not paid in sterling. So, if you are a US citizen in the UK being paid in dollars, you have to jump through additional hoops to borrow money to buy a home.
In short, regulation changes over the past decade have made it more expensive and riskier for banks and financial institutions to take on US citizens as clients. Given that it’s a relatively niche market (estimates from the Office for National Statistics suggest that fewer than 200,000 US citizens live in the UK), many high street banks and larger financial providers don’t see the benefit in taking on the added costs.

Private Banks pave the way

This is why a growing number of US clients moving from the US to the UK are looking for a private banking service. Private and family banks can act swiftly offering a bespoke flexible service that is best placed to wade through the intricacies and complexities of regulation.
Many US citizens applying for a loan or mortgage in the UK have experienced difficulty because their US income is not always included in affordability calculations and their liquid assets are not included in the calculations either. They need a bank that understands that liquid assets, undrawn earnings and trust funds can often form part of a high net worth individual’s financial life – and these are always integral to a private bank when weighing up mortgage affordability. Expert tailored advice to help customers through the process every step of the way can be the difference between a successful application and one that isn’t accepted.

Buying UK property as a US citizen

At Weatherbys, we have seen an increase in enquiries from US citizens in recent years, but the tax laws also affect British citizens living in the US.

We recently met with a British entrepreneur who has lived in the US for many years with his family but is considering returning once the children have all left home. He still owns UK properties and wants to mortgage one so he can invest in his business.

However, he found that fewer banks would help him with the refinance because he has a full-time US-based income, and not a particularly high one, but has significant liquid assets. This is where Weatherbys was able to step in and provide a mortgage as well as a full-time personalised UK banking service.

The can-do attitude and experience of our banking team is often helpful to clients, even when their query does not directly relate to their Weatherbys bank accounts. Recently, a British citizen living in the US had spent months trying to access cash they held in a UK building society. The building society was insisting that the client visit the UK branch to confirm the withdrawal. We discussed his predicament and after considering his options, the client gave Power of Attorney to a UK-based solicitor who was able to withdraw the funds on his behalf. The ability to have someone to speak within the UK was very helpful and led to a successful resolution.

The very mention of tax laws and FATCA sounds like a headache, and some people even suggest that giving up US citizenship would be the easy answer to avoid the legislation. But even if that’s something you are considering, surrendering citizenship is in itself an expensive and paperwork-heavy process – not to mention that it is an unnecessarily drastic step to have to take, simply in order to be able to open a bank account. 

How Weatherbys can help

Our award-winning Private Bank has a long tradition of delivering exceptional levels of personal service to our clients. We have an experienced private banking team, led by Simon Gardiner, Senior Private Banker, dedicated to servicing US citizens with a UK banking requirement.

We offer a full private banking service, covering day-to-day banking, FX services, cash management, savings, loans and mortgages. Our client base includes US citizens living in the UK and conversely British expats living in the US.

Our approach to starting a new banking relationship and lending money is refreshingly simple and begins with a conversation with a Private Banker. We are focused on the individual and our facilities are tailored to each client. When assessing loan and mortgage proposals, we can consider both UK and international assets and income.

Our clients are not required to place a particular sum of money with us. Rather, we look to work with high net worth individuals who share our values for relationship-led private banking where exceptional service is at the heart of everything we do.

Find out more

If you would like to find out more, simply click the button below to contact Simon Gardiner, Senior Private Banker.

Important information

Tax laws are subject to change and taxation will vary depending on individual circumstances. The value of an investment and its income can both increase and decrease and you may not get back the full amount originally invested.