When Might You Need A Seafarer Mortgage?

Every homeowner’s journey is unique, and many people’s circumstances do not allow them to fit the profile of a lot of high-street mortgage lenders, even if they are making more than enough money to meet the bank’s affordability requirements.

This is most commonly the case with self-employed people, who often need to go to great lengths to prove their creditworthiness, but others who have unconventional professions that can affect their tax status or cash flow can also struggle on the high street.

One of the best examples of this is seafarers, who often need the support of a specialist broker to ensure that they get competitive rates and the most suitable mortgage owing to a career which often keeps them away from the British Isles for an extended period of time.

When might you need a seafarer mortgage and how does it differ from any other loan?

If You Spend A Lot Of Time At Sea

A seafarer can be any professional who works at sea and spends a significant portion of the year away from the UK but has a registered home address in the country for tax purposes.

Exactly how long this is in a year will often depend on individual circumstances and can often vary, but the most important of these is the 183-day rule; seafarers must spend at least six months of their year living in the UK.

If you spend more than six months at sea each year, you may have to pay additional stamp duty, as you may be classed as a non-UK resident.  You should seek legal advice from a conveyancer to confirm your position.

If Your Income Is Seasonal Or Inconsistent

As with self-employed borrowers or people who rely primarily on royalties for their income, lenders can sometimes be reluctant to allow seafarers to apply for a mortgage with them based on the perception that their work is too inconsistent for their affordability criteria.

Lenders often work on a contract status which lasts the length of the journey or on a seasonal basis, meaning that their earning potential will vary more than a full-time employee on dry land.

Some lenders are unwilling to take these risks and will reject applications out of hand or set more restrictive lending criteria.

If You Qualify For Seafarers’ Exemptions

Spending a considerable amount of time at sea each year may mean that you can benefit from a specific tax allowance, which means that you don’t pay as much (or any) UK tax. It is important, however, that you still declare your earnings with the HMRC.

The Seafarers’ Earning Deduction is a tax exemption where seafarers can claim relief on foreign earnings whilst maintaining their UK residency status.