Strive specialises in various areas of mortgage finance, with a particular expertise in helping to secure mortgages for yacht crews. We understand the unique challenges faced by those in this line of work and are adept at navigating the often-turbulent waters of mortgage financing for yacht crew members.
Challenges of Securing a Mortgage for Yacht Crew and Seafarers
Working as a seafarer is undoubtedly a unique and potentially lucrative lifestyle. However, it does present challenges when securing a mortgage. Most off-the-shelf mortgage providers are not equipped to understand the nuances and challenges that this occupation presents.
Non-standard Payslips
Yacht crew and seafarers often have non-standard payslips, which can complicate the mortgage application process. They may qualify for the seafarers’ earnings deduction, meaning no tax is payable on their earnings. However, most mortgage lenders require applicants to pay UK tax for their income to be considered, creating a significant barrier for those in this profession.
Fluctuating Income
Income for yacht crew and seafarers can be highly irregular. These professionals might work for extended periods at sea, followed by periods of not working while back on land. This results in peaks and troughs in income, making it difficult for lenders who do not understand the nuances of this lifestyle to assess financial stability and certainty. Traditional lenders often insist on stable and predictable income streams, which can be a major obstacle.
Non-UK Based Employers
Many yacht crew and seafarers are employed by companies based outside the UK and are often paid in foreign currencies. This adds another layer of complexity, as exchange rates must be factored in. Most mortgage lenders only accept income paid in sterling from UK-based companies, further limiting the options for these professionals. This requirement can exclude many seafarers from being eligible for a mortgage with traditional lenders.
Navigating these challenges requires expertise and an understanding of the unique financial circumstances of yacht crew and seafarers.
What is a seafarer mortgage?
When we refer to a seafarer mortgage, we are referencing lenders that understand and cater to those working in this industry. The mortgage products and rates are the same as those offered to individuals in other professions, but with seafarer-friendly criteria. These mortgages fit in between expat and domestic mortgages.
How Claiming the SED Affects Your Mortgage Prospects
Claiming the Seafarers’ Earnings Deduction (SED) can impact your mortgage prospects in several ways. While earnings may be paid tax-free and often in foreign currency, you are still required to submit a UK tax return. This ensures that you maintain UK residency and remain eligible for a non-expatriate UK mortgage.
By filing a UK tax return, you demonstrate your financial status and residency, which can help lenders assess your mortgage application more favourably. Despite the tax-free status of your income, this step is crucial in proving your eligibility and stability to potential lenders who offer seafarer-friendly mortgage products.
Home insurance for seafarers
It’s not just the mortgage that poses challenges for seafarers; home insurance can also be trickier to source. If you’re away at sea for long periods, leaving your home unoccupied for extended periods can void standard insurance policies. At Strive, we work with insurers who cater to these unique situations, ensuring you have the coverage you need even when you’re away.
Seafarer mortgage criteria
The criteria for seafarer mortgages can vary among lenders, but here are a few key factors that are commonly considered:
- Employment: Employment with either a UK-based or an international company can affect your mortgage application. Some lenders have specific requirements regarding the location and nature of your employer.
- Residency: Living in the UK for at least 180 days and being domiciled in the UK for tax purposes is typically required, even if you are using the seafarers’ earnings deduction.
- Earnings: Some lenders insist on earnings being paid and received in sterling into a UK bank account. This requirement can be a significant factor in determining your eligibility for certain mortgage products.
Deposit Requirements
The deposit required for a seafarer mortgage is generally the same as for any other borrower. Deposits can start from as little as 5%, subject to general criteria, affordability, and property type. Larger deposits usually open up more options with lenders, offer better rates, and potentially improve affordability.
Borrowing Capacity
How much you can borrow depends on the lender and your individual circumstances. Typically, lenders offer 4.5 to 5 times your income plus your deposit. Some may take a two-year average from your tax returns or an average of your payslips to determine your borrowing capacity. Additionally, lenders might apply a “haircut” to your income to account for currency fluctuations, which can impact the total amount you can borrow.
Exchange Rate Calculations
Since income is often paid in a foreign currency, it is subject to exchange rate fluctuations. To mitigate the risks associated with this, some lenders apply what they call a “haircut.” For example, they may deduct 20% from the gross income to account for currency fluctuations. The exact criteria will vary among lenders.
Best Mortgage Rates for Yacht Crew & Seafarers
The best mortgage rates for yacht crew and seafarers depend on individual circumstances. NatWest and HSBC are among the mainstream lenders that have seafarer-friendly criteria, but the suitability of their products will vary based on personal financial situations.
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Mortgage Application Process for Seafarers
- Gather Documents
- Collect two years of SA302s and tax overviews.
- Gather three months’ payslips (if available; some lenders may request more).
- Prepare proof of ID and address.
– Obtain three months’ bank statements.
- Consult with a Mortgage Broker
– Schedule a meeting with a mortgage
broker who specialises in seafarer mortgages.
- Review Options:
- The broker will review available mortgage options based on your circumstances.
- Secure Agreement in Principle (AIP):
- Obtain an AIP from a lender to determine how much you can borrow.
- Property Search:
- Begin your property search based on the AIP and your budget.
- Apply for the Mortgage:
- Once you find a property, submit your mortgage application with the chosen lender.
How can Strive help
At Strive, we specialise in securing mortgages for seafarers and yacht crew.
Our experts understand the unique challenges you face, such as non-standard payslips and fluctuating incomes. We work with lenders who offer seafarer-friendly criteria, helping you find the best mortgage products for your needs.
We guide you through the entire process, from gathering necessary documents to securing an Agreement in Principle and completing the mortgage application.
We are dedicated to providing personalised support to make your homeownership journey smooth and successful.
FAQs for Seafarer Mortgages
- Do I need to be paid in sterling to qualify for a seafarer mortgage? While some lenders insist on earnings being paid and received in sterling, there are specialised lenders who accept foreign currency income and will consider exchange rate fluctuations in their assessment.
- Can I get a mortgage if I work for an international company? Yes, you can. Many lenders are willing to consider applications from seafarers working for international companies, provided other criteria, such as UK residency and income stability, are met.
- Are there specific mortgage products for seafarers? While the mortgage products and rates are generally the same as those offered to other professions, certain lenders provide seafarer-friendly criteria, making it easier for you to qualify.
- Do I need to be a UK resident to apply for a seafarer mortgage? Yes, most lenders require you to be a UK resident for at least 180 days and domiciled in the UK for tax purposes, even if you are claiming the Seafarers’ Earnings Deduction.
Can Seafarers Get a Mortgage? Yes, seafarers can get a mortgage. However, it may be more challenging due to the unique aspects of their income and employment. Specialised lenders and mortgage brokers who understand the nuances of the seafaring profession can help navigate these challenges and find suitable mortgage options.
Contact us today, and we’ll work hard on your behalf to find you a competitive mortgage.
For more information on mortgages for contractors, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.
