Tools
Expat Borrowing Power Tracker
Most UK lenders reduce foreign currency income by 20% before applying their income multiple. A smaller number use the full figure. On an overseas salary that gap can be worth tens of thousands of pounds of borrowing. This tracker shows today's exchange rates and what your salary supports either way.
Exchange rates move every day and so does what your salary is worth in sterling. The chart below tracks the pound against six currencies UK expats and overseas buyers earn in most often. The table underneath turns today's rate into a borrowing figure, with and without the standard 20% haircut.
GBP against six currencies, last 12 months
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Indexed to 100 at the start of the period. A line rising above 100 means the pound has strengthened against that currency, so the same overseas salary buys fewer pounds. Source: European Central Bank reference rates via Frankfurter. AED is derived from the USD rate using the UAE central bank peg of 3.6725.
What your salary supports today
Rates as at the latest published date.
| Currency | Annual salary | GBP today | Borrowing with 20% haircut | Borrowing without haircut | Difference |
|---|---|---|---|---|---|
| USD US dollar | |||||
| EUR Euro | |||||
| AED UAE dirham | |||||
| SGD Singapore dollar | |||||
| HKD Hong Kong dollar | |||||
| AUD Australian dollar |
Based on a 4.5 times income multiple, which is a common lender ceiling. Lender multiples, haircuts, stress tests and rates vary, so these figures are an illustration only, not a lending decision or advice. The exchange rates shown are the latest European Central Bank reference rates and are not the rate a lender or bank will apply.
Why the haircut matters
When a lender assesses foreign currency income it usually knocks 20% off the figure before doing anything else. The deduction is there to absorb exchange rate movement over the life of the loan. Some lenders go further and apply 25%. A few apply no haircut at all where the currency is one they treat as stable.
The effect compounds. The haircut comes off income and the income multiple is applied afterwards, so a 20% deduction on salary is a 20% cut in the maximum loan. The table above shows the difference for your salary at today's rate.
Which lenders apply no haircut, and to which currencies, changes through the year. That is the first question to put to a broker before you fix a budget.
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Pegged currencies
The UAE dirham, Saudi riyal and Qatari riyal are pegged to the US dollar by their central banks, at AED 3.6725, SAR 3.75 and QAR 3.64 to one dollar. The European Central Bank does not publish reference rates for them, so the tracker derives the dirham from the USD rate. Lenders generally treat income in these currencies as they treat US dollar income, and the haircut position is the same. For the longer view, our GBP exchange rate statistics guide charts the pound's history against the major currencies.
Common questions
Do all UK lenders apply a 20% haircut to foreign currency income?
No. 20% is the most common deduction and some lenders use 25%. A small number apply no haircut to currencies they consider stable, typically USD, EUR and a handful of others. The list changes, so check before setting a budget.
Which exchange rate will a lender use?
Each lender uses its own rate on the day it assesses the application, usually a published mid-market or bank rate. It will not match this tracker exactly. Treat the figures here as a guide to scale, not a quote.
Does the haircut apply to buy-to-let?
For buy-to-let the lender's main test is rental cover rather than salary, so the haircut matters less. It still applies where the lender has a minimum income requirement or uses your overseas earnings to top up rental cover.
Sources: European Central Bank euro foreign exchange reference rates, served by Frankfurter (frankfurter.dev). Central Bank of the UAE, Saudi Central Bank and Qatar Central Bank published US dollar pegs.
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