Seafarer Mortgage
Can seafarers get a mortgage? How does the process work?
Seafarers can get a mortgage. It’s a little bit more complicated than for someone in a standard role, and so it’s trickier to navigate. But if you are a seafarer, as long as you can show your income and contract of employment, and that you declare your income to HMRC it’s perfectly feasible to secure a mortgage.The important part of this is that although we can discuss your options and circumstances whilst you’re away working, once you are ready to submit a mortgage application, you need to be in the UK.
What mortgage products are available to seafarers? So any differences here?
In essence, there’s no difference in the mortgage products that will be available to you as a seafarer. You can get any type of mortgage: whether that’s a residential mortgage or if you’re thinking about buying a Buy to Let.Something to consider is that not many lenders lend to seafarers if you’re paid in a foreign currency. Clients we deal with are usually seafarers paid in pounds, euros or dollars. If you are paid in foreign currency, we need to work with lenders that accept that specific option.
We also need to look at how you’re paid and the frequency. We’ll come on to that in more detail shortly. Also, lenders want to see how often you’re at home versus at sea as well, which they’ll consider at the same time.
What type of property can I get as a seafarer?
You can buy any property you want, as long as you can get a mortgage for it and have the deposit. Lenders will look to see how often you’re at home. For example, if you’re on a contract working nine consecutive months out at sea, lenders may ask to understand why you’re buying a property as a home if you’re away so much. They will want to know what you intend to do with the property whilst you’re at sea.That may be okay if you have a family who will live there, but they may look at it differently if it’s just yourself. They will ask if you’re considering renting it out – in which case you should consider a Buy to Let mortgage instead.
How does the time spent at sea affect getting a mortgage?
If you’re at sea for more than six months in a 12 month window, potentially you may qualify for the ‘seafarers earning deduction’. You should speak to a tax specialist to understand your exact position.Essentially, if you’re at sea for six months per year, you don’t necessarily need to pay tax on the income you earn whilst you’re at sea. There’s a benefit there which could increase your net income.
The other thing to consider is that if you do spend more than six months at sea each year, you may have to pay additional stamp duty for non-UK residents. Your conveyancer or solicitor will clarify your exact stamp duty position when completing on your property.
You do have to make sure you’re declaring your earnings to HMRC, whether that’s via self-assessment or an accountant. It’s fairly straightforward, and helps strengthen your application to a mortgage lender. Declaring your non-taxed income to HMRC helps to validate the source of the income, as well.
Is it easier to get a mortgage as a seafarer with a partner?
It can be, in terms of how much you can borrow. If you’re with a partner and you combine your incomes, you may be able to borrow a little bit more and get the property you really want.There’s no real difference in getting a property with your partner whether you work at sea or not. The only thing to consider is that some lenders who lend on foreign currency may not consider a mixed currency income.
For example, if you earn in euros and your partner earns in UK sterling, some lenders might not accept that – it’s too complicated for them to deal with. In that case we need to go with a different lender who will look at mixed currency income.
How much deposit will I need and how much can I borrow?
Again, there’s no difference for a seafarer, so you could potentially purchase property with up to 5% deposit. But the bigger your deposit, the better deal you’re likely to get, and the lower the interest rate – as you’ll have more equity in your home.As with any application, how much you can borrow depends on your income. It’s worth noting that some lenders who do accept foreign currency income will factor in assumptions for currency fluctuations. They may take a percentage off your income to allow for the fact that you’re paid in euros or dollars, which means that you might not be able to borrow as much as if you were paid in UK sterling.
How do I prove my income as a seafarer, and how is affordability calculated?
Proving your income is really important as a seafarer, so it’s really crucial to keep hold of your documents.Your contract of employment will explain whether you’re paid at a daily rate, or via a salary, so it’s really important to keep hold of it. Some seafarers have to sign a new contract whenever they change yachts or ships, in which case you should keep a historical record of your movements between boats. It will help validate your income.
Most seafarers are employed by a company based in one of the big shipping ports like Guernsey, the Isle of Man or even the Caribbean. We’ve dealt with a few there.
Again, how you’re paid varies depending on where the company is registered. If you don’t get pay slips, a pay advice slip or statement of payments from your employer shows what you’re receiving from your employer. We then reconcile that with what’s coming into your bank account.
Finally, the other important thing to do is make sure you’re declaring your income to HMRC. You can do that via self-assessment yourself, or you can use an accountant to do that for you.
That will help validate your income and show lenders that you’re declaring all the income you’re receiving in the right way.
Are there any government schemes to help seafarers?
I mentioned this a little earlier – that depending on how long you’re at sea in a 12 month window, you may qualify for the Seafarers’ Earnings Deduction, which essentially means that if you’re away at sea for 183 days or more in that 12 months, you may not have to pay tax on that income you’ve earned.You may still have to pay tax on other income you get from the UK. For example, if you already have a Buy to Let, for example, that would still need to be declared in the normal way and you may have to pay tax on that. But you may not have to pay tax on the income you earn from your employment at sea.
Other schemes are all open to seafarers, so you can still open a Lifetime ISA to help you build up a deposit a little bit quicker. You still qualify for shared ownership properties if you can find one to buy, and all the other schemes around new builds should be open to you as well.
There are no limitations on what’s available for seafarers, but there is some extra benefit as well.
How can a mortgage broker help a seafarer get a mortgage?
As a seafarer, it can be more complicated to secure a mortgage. It’s all about finding the right lender to fit your circumstances. We have a lot of experience looking after seafarers, from yacht captains to marine engineers, stewardesses and chefs.We’ve dealt with the whole crew, essentially. We can help take the complications away and make it a much smoother process for you. We can let you know what to think about in preparing yourself to secure a mortgage as a seafarer, and what to consider as well.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
Speak To an Expert
Seafarer Mortgage (Part 2)
Continuing the conversation on mortgages for seafarers with Rohit Kohli. Episode two of two, recorded in October 2024.
How many days a year must you spend in the UK to qualify for a seafarers mortgage?
As long as you’re a UK citizen and resident in the UK, there’s no minimum time you need to spend here to get a mortgage. However, some things are impacted by how much time you spend at sea.
Before we discuss those, it’s important to say that I’m not a tax advisor. Anyone listening to this should seek their own tax advice from a qualified expert. But if you are a seafarer, you may be able to claim what’s called the Seafarers Earning Deduction.
That’s where you can claim tax back from your earnings whilst at sea outside of the UK. To claim that back, you need to show you’ve spent more than half of any 365-day period outside the UK. It’s a bit complicated, and you need to keep good records to claim the tax back, but potentially if you work at sea, you could use that exemption to not pay income tax in the UK.
The second thing to be careful of is stamp duty. In 2021, the government introduced ‘stamp duty for non-UK residents,’ where a surcharge applies if you’ve not been in the UK for more than half of the 365 day period before you complete – or the 365 days after you complete.
Again, it’s a little complicated and you should seek the advice of a tax specialist to make sure you understand your position exactly.
Will my non-UK based income or fluctuating earnings impact my application? If so, how?
Yes, but it shouldn’t prevent you from securing a mortgage, as long as we have the right documentation. We need to show the lender what your income looks like over a much longer period of time. They want to see consistency in your earnings. They don’t like variability. If your income does fluctuate month to month, we’d want to understand why.
If you work on a trawler, for example, you may be at sea for different lengths of time, depending on the fishing ground you’re going to. You might be at sea for three weeks one month and two weeks the next month.
Or, you may be paid for the days you spend at sea, and that varies each month depending on the time of year, or the location of a yacht you’re working on, for example. Lenders understand that your income can vary and will look at your income over longer to see the consistency.
If you’re not earning in pounds sterling, some lenders may deduct anywhere between 10% to 25% from your earnings, depending on the currency when calculating how much you can borrow. That takes into account exchange rate fluctuations to reduce the risk of their lending decisions.
Is there a minimum income requirement for seafarers applying for a mortgage?
Whether you’re a seafarer or you’ve just got a normal job, it’s the same rules. You just need to earn an income for the mortgage that you are looking to secure.
How is income assessed for a seafarer’s mortgage?
Income is assessed in the same way for seafarers as non-seafarers. However, if you’re buying jointly with someone, some lenders don’t allow you to mix currencies. So if you’re earning in dollars and your partner’s earning in pounds, they may not accept that joint income.
Other lenders will allow you to mix currencies. In that scenario, where you’re earning dollars and your partner’s earning pounds, they’ll be happy with that – although they usually like one currency to be in sterling.
If you’re earning in dollars and your partner’s earning in euros, we may not be able to get you a standard lender – we may need to go into more specialist markets.
Is both offshore and onshore income considered, especially with contract based work or variable pay?
With variable pay or contract pay, be aware of long gaps between your contracts. Lenders don’t normally like gaps of more than one or two months, but it can work in some professions.
We recently talked to a seafarer who works on an oil tanker. He’s been out at sea for six months solid. Now he’s back in the UK and he doesn’t fancy going back to work for two or three months.
As long as we can show the consistency in that approach to a lender, and that what he’s earning in six months is the equivalent of a 12-month salary, lenders will usually work with us to provide a mortgage.
One thing to consider is that if you are out to sea for a long period of time, lenders will want to understand what’s happening to your property while you’re away. They’ll want to know who’s going to keep an eye on it. They’ll be nervous if the property is vacant for a long period of time – is it at risk?
At the end of the day, they have an interest in the property and they may be reluctant to lend if they think you might rent it out whilst you’re away – lenders won’t allow you to do that on a residential mortgage.
What documentation do I need to provide as a seafarer to apply for a mortgage?
We need all the standard documentation we normally ask for – proof of identity with your driving licence and passports, and your recent bank statements.
If you’re paid in foreign currency, we want the bank statements for that. A lot of people have Revolut or Starling accounts where you’ll have two statements, one in a foreign currency and one sterling. We’ll need all those statements, plus your credit report.
Other documents will depend on how your income is structured. For example, if you are contracting from one vessel to another, we will need to see copies of those contracts going back one or two years.
Lenders will also ask for longer periods of pay slips – normally three or four months. They may ask for six months or 12 months, or longer, depending on the type of contract that you have.
Sometimes people aren’t provided with payslips. Perhaps they’re employed by an international company that doesn’t work in the same way as UK businesses. You might get a statement of pay instead, once the contract is finished. We will use that, as long as that statement comes directly from the company and is addressed to you.
We often need your tax returns to show you’re declaring your income to HMRC. If you’re claiming the seafarers earnings deduction I mentioned earlier, that will help strengthen your case. So a lot of paperwork is required, but if you’re organised it will make life a lot easier.
One thing to mention is that everything must be in English. Sometimes contracts are in a different language. They need to be translated into English and certified that they are translated accurately. You need to bear that in mind, as well.
Are there any lenders who offer more favourable rates or terms for seafarers?
No lenders offer lower interest rates or lower fees to seafarers. But certain lenders understand the role much better than others. They therefore take a more pragmatic approach to the nuances of the profession. They understand how the profession works, and are more accommodating in lending to people in those roles.
What’s the minimum deposit needed for a seafarer mortgage?
This is an important point within the conversations we have. If you are a seafarer earning a foreign currency, you’re unlikely to get some of the latest mortgage offers available at the moment, where you could secure a mortgage with just a £5,000 deposit.
You’re going to need a 5% deposit as a minimum to buy a residential property, and at least 25% for a Buy to Let property. But the same rules apply. The bigger the deposit you can put down, potentially the better the interest rate you can secure with a lender.
Can I still get a mortgage if I’ve had issues with credit in the past such as missed payments while at sea?
Yes, but it does depend on the scale of the issues and when they happened. Your choice of lender will likely be limited as a result of those issues.
The odd missed payment can be explained. We actually did a mortgage for someone who worked at sea and had missed their mortgage payment. Their salary was a day late coming from their employer, because it was a bank holiday where that employer was based.
So they missed that mortgage payment, but made it up within two or three days. It did go on their credit report, but because we were able to explain to the lender what had happened, there were no issues in securing a normal mortgage for that client.
But if you’re regularly missing payments because you’re at sea, it may put off lenders. It suggest you’re not effectively managing your finances, which is very important to them.
What additional fees are typically involved in getting a mortgage for seafarers?
It depends on your circumstances. The right thing to do is speak to a mortgage broker about what you’re trying to achieve. At that point, we should be able to give you a much better understanding of the costs and fees. It does really depend on the complexity of your circumstances and the type of kind of transaction you’re looking to complete.
Is there any specific insurance that seafarers are required to take out when applying for a mortgage?
Normally there are no conditions placed on you as a seafarer to take out an insurance policy of a certain type, but we always recommend you take out the right policies to protect both yourself and your home from unexpected events.
Because of the nature of the profession, the longer seafarers wait to secure that insurance policy, the more expensive and difficult it is to get. We always talk to clients about protecting themselves when we take their mortgage out.
It’s surprising how many people don’t think of doing that. When we explain the benefits, they quickly change their minds and do take life insurance or income protection or critical illness cover.
Do I need to be a UK resident or have a UK address to apply for a mortgage as a seafarer?
Yes. If not, you’ll be treated as an expat and there are very different rules around that type of mortgage and a different set of lenders. Generally, you need to be a UK citizen who is resident in the UK, with a UK address.
Are there flexible repayment options if my income fluctuates due to the nature of my work? Are there mortgage options with payment holidays that would suit my work schedule?
Some lenders do offer mortgages where payment holidays are an option. Normally, though, you would need to have had that mortgage for some period of time, such as one or two years. Potentially you may need to have made some overpayments or additional payments toward the mortgage, to build up a reserve so you can take those payment holidays in the future.
If you are worried about this, speak to your mortgage advisor. They can help you structure your mortgage to take into account your fluctuating income and provide you with the flexibility you need.
We’ll look at your circumstances and see what’s the right type of mortgage for you, the right term and how to structure that mortgage so you’re always going to be able to pay it. If you don’t get paid for a month or two, you’ll still have the ability to service the mortgage and then overpay that later.
What else do we need to know about seafarer mortgages?
In our experience, the key to securing a mortgage as a seafarer is preparation. Lenders will want reassurance that your income is stable, even if it’s variable or in a foreign currency.
So keep your documents organised and maintain clear records of your contracts when you’re at sea. Be transparent about your circumstances. That’s all going to help package your case for a lender in the strongest possible position.
We would always suggest working with a broker who understands the specific challenges and nuances in your profession, and has experience in dealing with seafarers. We can help you navigate through all the intricacies of the process and identify the most suitable lenders and mortgage type.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
NOT ALL BUY TO LET MORTGAGES ARE REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.