Mortgages for Foreign Nationals buying in the UK
With almost eight million foreign nationals living in the UK according to the last census (2011), a high number of people applying for a UK mortgage will not hold a British passport. We are talking to Jas Bola of Hillcrest Property Solutions about the rules governing mortgages for foreign nationals.
How difficult is it for an EU national to obtain a mortgage in the UK?
For now it's relatively straight forward - Brexit may change that. At the moment as long as the EU national has lived and worked in the UK for at least three years, they are likely to be treated in the same way as citizens. They would need the same documentation and they would follow the same process as any British person.
In other words, the requirements are as follows:
- you need to have been resident in the EU for more than 3 years,
- you have a UK bank account and a traceable credit history,
- you have a permanent job in the UK.
You will have to meet the same credit rating standards as UK borrowers, but you shouldn’t have any problems getting a competitive UK mortgage.
What about mortgages for non-EU nationals?
If you are not an EU national then you may have no traceable credit history within the UK, which causes complications when applying for a mortgage.
To solve this, the basic requirements you will have to meet are:
- you need to have been a resident in UK for more than 3 years,
- you need to have a permanent job in the UK,
- you need to have permanent residence rights in the UK, or a UK work permit,
- you need to have a UK bank account and a traceable credit history,
- you need to have access to 25% deposit on the value of the purchase price via your own savings.
Permanent residence is considered preferable to only having a work permit, but there are lenders who will provide a mortgage on the basis of a work permit only, dependant on the number of years lived within the UK and address history provided along with the deposits available through personal savings. Some lenders want you to have an indefinite leave to remain in the UK.
The requirement to have lived in the UK for three years is due to the necessity of building up a UK credit history before lenders can approve your mortgage application, but there are ways to avoid this problem:
Normally when assessing an individual ability to obtain a mortgage, we look to see if the clients are on the voters roll. In many instances, non-EU nationals cannot apply to be on the Electoral Register. This can have a detrimental impact when lenders conduct a credit search on an applicant for mortgage purposes (credit searches are conducted against individuals previous addresses in order to understand the financial history held at those address and to see if an individual has left bad debt at any of the past addresses).
In order to build such history and indeed improve one’s credit score, non-EU nationals should look to join the open register. More information can be found at the Register to Vote section of the Government website.
Hillcrest Property Solutions spoke to Credit Expert about registering on the open register; we were advised ‘Being a government website, it offers a similar function as to being on the electoral register. Therefore, we advise any client who is a non-EU nationals to get registered sooner than later as this will help their chances when applying for a mortgage’’.
What if you are a foreigner who is self-employed?
If you are self-employed, most banks will want three years of accounts. Failing that, most banks will want to see two years running of a business, although you can sometimes get away with just one year of accounts.
In these cases, the underwriter within that particular lender will want to see that you have a track record of working in the same field. They might want to see your P60s from past employers in the same field on top of one year worth of accounts.
What if you are a non-EU spouse of a UK national?
If you’re married to a UK national and you’ve been here for three years and you’ve got at least two years left on your visa, you’re not restricted. Even if you haven't been working but your husband can afford the mortgage and the deposit – that shouldn’t bear on whether you can get a mortgage.
What about UK citizens living abroad who might wish to buy a property in the UK?
Shared Ownership deals will not be available to them. If they are looking to buy on the open market they should be able to get a mortgage but some lenders are not too happy accepting applicants who get their salary paid in a currency other than Pound Sterling. There are mortgage advisers who would be able to assist them.
How to I find a lender who will accept a foreign national?
As always with non-standard mortgage requirements, the best solutions to select a choice of mortgage lenders is by going through an independent mortgage broker like Hillcrest.
Being independent we have access to the whole mortgage marketplace, including mortgages that are only offered through brokers (i.e. not directly to customers) where sometimes the best deals can be found.