Foreign National Mortgages
If you are a foreign national living in the UK on a Tier 2 visa – for skilled workers coming to the UK to take up employment – then you may want to buy a property, either on a temporary basis until you return to your home country, or as a permanent investment.
Many Tier 2 visa holders wonder whether they will be able to get a mortgage in the UK. The basic answer to that question is yes: your Tier 2 status will not in itself prevent you from being able to get a mortgage. However, different lenders will take different criteria into account when considering a mortgage application from a foreign national with a Tier 2 visa.
Tier 2 Visa Mortgages
Tier 2 Visa Mortgages
In addition to the normal affordability and credit assessments that lenders apply to all mortgage applications, lenders will usually take the following two factors into account when considering an application from a Tier 2 visa holder.
- How long you have been resident in the UK.
- How long you have left on your Tier 2 visa.
As a general rule of thumb, lenders will expect you to have been resident in the UK for at least two years – although some may look for three years’ UK residency. This is often the case both as a general eligibility criteria for the mortgage, and to ensure that the applicant has been in the UK long enough to build up a credible record of employment and credit history. Some lenders may also expect Tier 2 mortgage applicants to have a UK-held bank account and/or savings.
Discovering you may not be able to obtain a mortgage due to your credit history can be worrying however this can also be escalated when combined with the fact that you are on a tier 2 visa. Being able to get a mortgage should you have a history of bad credit whilst on a tier 2 visa may be possible however, as with much in the mortgage industry, it is very dependent on your overall personal circumstances especially the degree of the credit history. Due to the probable limited availability it is recommended you contact a specialist broker such as ourselves here at Just Mortgage Brokers and speak to an adviser who is an expert in this field.
When lenders assess a mortgage application, there are essentially three groups of factors they consider.
- The information you have provided about yourself and your personal circumstances. Many lenders use a score-based system to evaluate factors including your age, how long you have been in your current property, how long you have been in your current job, and so on. If you have an existing relationship with the lender, such as a current account, then this may also be taken into account.
- An assessment of your ability to afford the mortgage repayments. This is perhaps the main determining factor of whether a lender will give you a mortgage. All lenders have an obligation to obtain proof that the borrower can afford to repay the mortgage. For people in employment, this is most often verified with payslips and bank statements.
Information obtained from external credit reference agencies. The three UK credit reference agencies – Experian, Equifax and Callcredit – hold records of any credit arrangements you have held within the UK. This can include overdrafts, credit cards and personal loans, as well as other consumer credit agreements such as mobile or utility bills.
A number of things can contribute to your credit report and your credit score. Negative marks can be caused by:
- CCJs – A County Court Judgment in which someone is taking action against you following a missed payment.
- Defaults – The failure to meet the legal obligations (or conditions) of a loan, such as a home buyer failing to make a mortgage payment.
- IVAs – An Individual Voluntary Arrangement for those attempting to avoid bankruptcy.
While past credit problems can make it more difficult to get a mortgage, that doesn’t mean it will be impossible for you to buy a home. Some lenders – and particularly more specialist lenders beyond the big high-street names – can accommodate borrowers who have a poor credit history, including foreign nationals with a Tier 2 visa.
Just Mortgage Brokers has a history of supporting foreign nationals with a Tier 2 visa, including having helped one such customer who had a default, which was caused by late payments on an unsecured credit commitment. The time left on her Tier 2 visa had presented a problem, as she was struggling to arrange a mortgage, further compounded by the stresses of bad credit.
In this case, we were able to place a mortgage on the high street, and also achieve a result that would have been considered extremely favourable, even without the history of bad credit looming over the situation.
Property has historically been a good investment for numerous buy to let purchasers and although much has changed in this sector, it continues to be seen as such by many for the future. Would be purchasers on a tier 2 visa will not automatically be declined purely on this basis however buying a property for investment is still one that requires certain fairly strict criteria to be met such as the amount of deposit required. Getting the right information and advice can therefore be critical in ensuring you know what is, or possibly not, possible.
Mortgages for foreign nationals follow a similar pattern to those for with Tier 2 visas. Lenders typically expect the applicant to have been resident in the UK for at least two years, with a permanent job in the UK and a UK-held bank account. They will also usually expect foreign applicants to have either permanent residence rights in the UK, or an appropriate work permit.
Like Tier 2 visa holders, there is nothing to stop individuals resident in the UK with a Tier 1 visa applying for a mortgage. In fact, as Tier 1 visa holders typically have greater capital and may be looking to buy more expensive properties, this can potentially allow access to a wider range of lenders, including specialist lenders such as private banks. Tier 1 visa types include:
- Tier 1 (Entrepreneur) visa – for individuals who want to set up or run a business in the UK, with at least £50,000 investment funds to apply.
- Tier 1 (Exceptional Talent) visa – for individuals endorsed by the Home Office as an emerging or recognised leader in a particular field.
- Tier 1 (Graduate Entrepreneur) – for graduates who have been officially endorsed (by either the Department for International Trade or a UK higher education institution) as having a genuine and credible business idea.
- Tier 1 (Investor) visa – for individuals with over £2,000,000 in investment funds to apply within the UK.
Foreign nationals who are in the UK on a Tier 5 visa – which includes charity workers, religious workers and government-authorised exchange workers – are considered temporary workers and therefore would not be likely to be accepted for a UK mortgage.
With a team of advisers who specialise in mortgages for foreign nationals, Just Mortgage Brokers has experience arranging mortgages in more complex cases, including where adverse credit ratings may be involved or where a visa is due for renewal. We have access to a leading network of specialist lenders and know which to approach to find the right deal to meet your personal circumstances.
For more information about Tier 2 visa and foreign national mortgages, please get in touch with our specialist team today