You can apply for a UK mortgage if you are a foreigner, but it can take a long time to sort everything out. Let our guide to foreign national mortgages help you through the main steps.
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It is possible to get a mortgage as a foreigner, but one problem you may face is the comparatively small number of lenders offering them. Few high street banks do, for example, which means they are often dependent on specialist lenders and smaller building societies.
It also tends to be a bit more expensive in terms of interest rates than getting a mortgage if you live in the UK. You will also need to put down a sizable deposit, usually around 25% of the property's value.
Where you live can also be an issue, as most lenders will have a list of "acceptable" countries where they are happy to lend to residents. If your home country isn't on this list, you might be in trouble.
Stricter identity checks will also be implemented, as lenders will want a clear idea that you are who you say you are. In that case, some lenders will want to meet you in person, which would mean a trip to Britain to secure the loan. However, some have been known to send a representative to their country of residence, especially for high net worth clients.
If you are an EU citizen, you will be treated in the same way as a UK citizen, but if not, you will have to meet additional criteria. Here's what you need to know to make a successful mortgage application.
Mortgages for EU citizens
Lenders generally treat all citizens of countries in the European Economic Area (EEA), which includes the 27 countries of the European Union and Iceland, Norway and Liechtenstein, the same as British nationals for mortgage purposes.
Although Switzerland is not in the EU or EEA, the same applies to its citizens.
There is currently no indication that this will change as a result of Brexit, but there could be developments in the future.
Like anyone applying for a mortgage, the lender will want to see that you have a goodcredit historyin the UK, which is a potential hurdle if you're from elsewhere.
“You need to have a credit history of at least 12 months to stand a chance of being accepted, but the longer the better, ideally three years,” says David Hollingworth of mortgage broker London & Country Mortgages.
Any type of credit you have, including overdraft, credit card, loan, and cell phone contract, will appear on your credit reports; you creditors in the best light.
Registering to vote, if you are eligible, and having a UK bank account from which you have set up direct debits will also help.
Mortgages for non-EU citizens
If you are not a citizen of an EEA country or Switzerland, you will have more hurdles to overcome.
If your passport shows you have indefinite leave to remain in the UK, most lenders will consider this. Otherwise things get more complex and whether you are considered depends on the type of visa you hold.
Halifax, for example, requires applicants to have a work permit or visa with at least two years and six months remaining or to have lived and worked in the UK for more than three years (excluding periods as a refugee or student). If none of these apply and the work permit is less than two years and six months old, the creditor insists that the employer confirm that the applicant has applied for or wants the permit renewed. Applicants must also submit any documents relating to the conditions attached to their visa. When applicants cannot meet the conditions, they are likely to be turned away or offered a lower amount, such as no more than 75% of the property's value (known as loan-to-value, or LTV).
Nationwide considers applicants who hold certain types of visa: a Tier 1 or Tier 2 work visa (for highly skilled and skilled workers) or a UK residency card (showing permanent residency status), family or spouse or descent in the UK. This also applies to joint applications where only one of the applicants is from outside the EEA. Applicants are also limited to 75% LTV unless it is a joint application where one of the applicants is from outside the EEA and that person's income was not included in the application. However, in most cases, applicants must include both incomes to maximize the amount that can be borrowed.
Santander specifies that the property must be for own use and for immediate residence. If borrowing more than 75% LTV, applicants must have indefinite rights to live and work in the UK. They must have lived in the UK and been entitled to work for at least 12 months.
Mortgages for foreign self-employed
The criteria for proving your income so that the lender can ensure that the mortgage is affordable for you are the same whether you are a foreigner or not, even if you are self-employed.
“As with UK citizens, the lender will want to see at least two years of bills, so it will be harder for you to get a mortgage if you've been self-employed recently,” says Hollingworth.
Can you get a mortgage with a residence permit?
The simple answer is that if you're an EEA or Swiss citizen, it's easier than not. If you are an EEA or Swiss national, or have indefinite leave to remain in the UK, getting a mortgage should be easy and most lenders will be willing to consider it.
If you are not an EEA citizen and do not have an indefinite residence permit, it is more complicated. FORmortgage brokercan help you navigate the different criteria set by different lenders to increase your chances of submitting a successful mortgage application.
Can you get a mortgage with a Tier 2 visa?
The basic answer to that question is yes: your Tier 2 status will not in itself prevent you from getting a mortgage.However, different lenders will consider different criteria when considering your mortgage application.
In addition to the normal affordability and credit assessments that lenders apply to all applications, they will also consider the following:
- How long have you been resident in the UK?
- How much time do you have left on your Tier 2 visa.
- Proof of having resided in the UK for at least two years, although some may apply for three years of UK residency.
- Some lenders may also expect Tier 2 applicants to have a UK bank and/or savings account.
- It is common for lenders to wait a minimum amount of time to stay before your Tier 2 visa expires, usually six months or a year.
- Lenders may also take into account whether you expect your visa to expire or whether it is likely to be routinely renewed.
Getting a joint mortgage with a non-UK citizen
It is possible to obtain a joint mortgage where one borrower is a UK citizen and the other is a non-UK national, although the number of lenders offering this type of product is limited.
Criteria such as employment status, income, credit score, deposit amount and level of UK residency or the type of visa the foreign national holds will all have an impact on the application process and which mortgage is available last.
In this scenario, it can be useful to use amortgage brokerto help with the research process based on your specific circumstances.
What documentation is needed?
The exact documentation required will depend on the bank you use. However, you can expect to be asked the following:
- Copies of your personal identification documents.
- Documents showing you are credit worthy (credit check, bank statements, payslip, P60, and benefits statement).
- Documents proving the affordability of the mortgage (household cash flow statements, utility bills or bank statements).
All these documents must be provided to the bank to obtain a mortgage in principle, which means that a lender has agreed how much they will offer if you find a suitable property.
Once you've accepted an offer on a home, you'll need to submit more documents, such as a property appraisal and research to prove the price is right.
Do foreigners pay stamp duty?
In April 2021, different rates of stamp duty came into effect for non-UK buyers of residential property in England and Northern Ireland. These new rates are 2 percentage points higher than thosestamp duty rateswhich apply to purchases made by UK residents.
You are classified as a non-resident if you have spent less than 183 days in the UK in the year before purchasing property.
This new surcharge does not apply to purchases of land or buildings in Scotland or Wales, where non-resident purchasers pay the same stamp duty as people living in the UK.
It is entirely possible to get a UK mortgage if you are not from here. You may be subject to extensive background and deposit checks and slightly higher interest rates, especially if you are from outside the EU, but the process is doable.