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Can a foreign national get a mortgage on a visa?

A simple and (nearly) definitive guide to whether foreign nationals from outside the EU can get a mortgage.

One of our main areas of business is foreign nationals on visa’s, and it’s interesting to see how many people are asking on forums on other websites whether it’s possible for them to get a mortgage and how much misinformation is spread around.

So let’s dispel some myths first. Getting a mortgage on a visa isn’t difficult in per se. The vast majority of lenders however will not lend at all on these cases.

So it’s very difficult for a member of the general public to try and find the right lenders and at the same time make sure that all other requirements are met too.

That’s why you see so many people on forums trying a lender recommended by someone else but then being told they cannot apply.

The benefit of an advisor like ourselves is knowing which lenders we can ignore altogether (and dealing with these applications frequently enough to know if they have recently changed their rules).

And at the same time knowing enough about all of the other eligibility rules to quickly and easily determine whether you will be able to get a loan.

It’s not something where the lender makes a case by case decision (in general), for most applicants if they meet the guidelines below then they will be accepted subject to credit scoring and all other rules.

We normally offer a fee free service, so there’s very little to gain in trying to DIY an application (whether you’re on a visa or not).

So the point of this post is to give you a simple answer as to whether we have lenders who can consider your application and visa status.

It’s also very difficult to be definite because this post basically compresses the true bulk of the different lenders eligibility rules to try and make things simple.

So if you don’t meet the rules below feel free to ask us about your situation and we will be happy to go into more detail.

So then, can we get you a mortgage?

 

Applicants who have lived in the UK for more than 2 years

If you have resided in the UK permanently for 2 years or more, and have a 10% deposit we have lenders available.

This is regardless of the type of visa (except refugees; see below).

It obviously still depends on how well you credit score, and other factors like having suitable income etc.

It’s possible to get a mortgage up to 95% if you have been employed/self-employed continuously for 3 years or more.

In this instance continuously employed could mean working part time whilst studying for example, as long as you have been working for someone without a break of more than a few weeks between any 2 roles.

Or if you have more than 30 months remaining on your visa then again it’s possible to go up to 95% and this is also generally straightforward.

If you have a tier 2 visa then a letter from your employer confirming their intention to renew your work permit is also suitable with less than 30 months remaining.

For joint applications only the applicant who has a sponsored work permit would need the employers letter.

Bear in mind though that the visa is only one element of the application. Meeting the criteria for an applicant on a visa doesn’t mean you meet the rest.

That’s why one of our roles as your advisor is to make sure that you meet all the criteria required before application.

 

Applicants who have lived in the UK for less than 2 years

If you have resided here for less than 6 months, it’s very unlikely that you will have sufficient credit score to get a mortgage (but there can be exceptions, especially if you have UK bank or credit accounts with longer term history).

So in most cases you will need to have been residing here for 12 months, it is technically possible in the first 12 months but will be very case by case dependent.

With less than 2 years UK residency, mortgages are still readily available up to 95% of the purchase price if you have more than 30 months on your visa.

For those on a tier 2 visa with less than 30 months remaining if your employer can confirm that they will look to extend your visa then again 95% is still possible.

Applicants on a tier one visa can apply up to 90% once they have resided in the UK and been employed for more than 6 months regardless of the remaining term on the visa.

If you have 25% or more deposit, then mortgages are available regardless of how long remains on your visa or how long you have actually resided here.

But for anyone with less than 12 month’s residency credit scoring will be a major factor so the shorter the UK residency history the less likely it is possible.

If you don’t have 25% deposit, have been here less than 2 years, and have less than 30 months remaining on your visa, and a visa such as an ancestry or spousal visa then it could be possible to buy a new build property under the help to buy shared equity scheme.

 

Very large deposits

If you have more than 30% deposit available, then describing a conclusive answer would be too complicated as there are far more potential lenders.

So if this applies to you but you don’t meet the criteria above give us a call to discuss it.

 

Self employed

We don’t see a lot of self-employed applicants on visa’s however this does not exclude you from application.

But being self-employed has its own criteria with each lender which is probably far more complicated so really you would need to get in touch with us to discuss this in more detail!

 

Refugees

Refugees are the main exception to the rules above. Most lenders won’t accept applications from refugees until permanent right to reside is granted.

If you have a deposit of 25% or more there may be options available though, once you have 12 month’s residency in the UK.

 

EU Nationals

EU Nationals still currently have full legal right to reside in the UK and so most lenders can accept your application.

However the length of residency is the main factor so if you have been in the UK for less than 3 years you may well still benefit from our assistance.

 

In summary

So then as you can see here, there are plenty of options available to meet most circumstances.

These are all standard products from high street banks. You won’t get a higher rate because of your nationality.

Every case is different which is why we cannot give you a completely definitive answer (it’s also ludicrously complex to detail in a blog post).

So always seek advice from a professional like ourselves.

We also don’t treat foreign nationals as high complexity cases. We won’t charge an advice fee purely because of being on a visa.

Most of our clients receive a fee free service including foreign nationals.

Those who we do charge fees are usually borrowing smaller amounts, or have other more complex issues (like multiple forms of self-employment).

For more information or to discuss your circumstances call 08454594490 or fill in our enquiry form here.

Get your fix quick. The downgrading of UK banks likely to increase fixed mortgage rates

If you have been thinking about fixing your mortgage by remortgaging to a new deal then now really might be the prime time to do it.

Fixed rate mortgages have been dropping steadily for several months with the expectation that interest rates in the UK are now likely to remain low in the long term. However the downgrading of several major banking groups in the UK by the rating agency Moody’s last week is likely to put pressure on the big UK mortgage lenders to increase the cost of these deals.

It could be a flash in the pan though, rates were beginning to rise early this year when the economic outlook was less gloomy but the effects of the Tsunami in Japan and the subsequent concerns over the Eurozone were enough to revert the trend.

What is certain though is that there are fixed rate mortgages available which are several percent lower than the average mortgage interest rate paid by borrowers over the last 25 years so if you are concerned by the possibility of higher rates and don’t have too much to lose by switching to a fixed rate deal there have definitely been far worse times to take a fixed rate.

New Mortgage Calculators Launched by Rightmortgageadvice.co.uk

We have recently launched the first of several new mortgage calculators which aim to bring much more sophisticated systems for borrowers to assess their lending ability online.

The most important of these new calculators is the maximum loan calculator which actually models some of the more complex systems for affordability lenders are using to assess customers borrowing potential.

Lenders are increasingly stepping away from using pure income multiples and the large high street banks and building societies now take into account many factors including credit scoring, number of financial dependents and overall debt to income ratio to decide on an appropriate borrowing figure.

The calculator is as far as we are aware the only one currently available which actually illustrates how different types of lenders calculations vary and takes into account dependents, existing credit commitments and credit scoring.

There are several more new tools in development which will soon be added so keep an eye out for more to come.

Mortgage Broker Q&A – Do credit searches affect my credit score and how many is too many?

Question: I have been told that credit searches affect my credit score, is this true?

Answer: Yes – but it depends on how many have been done and by whom.

When you apply for credit most lenders will use a credit reference agency to get a credit report of your borrowing history. This credit search will leave an imprint on your report, usually just saying the lenders name, date and the type of credit application.

It is typical for borrowers to shop around when applying for credit so having three of four credit searches in quick succession is not likely to cause you a problem, however if you have lots of credit searches within a 3 month period (I would say between 7-10 or more) then your credit score may start to be temporarily affected.

This is because of an assumption that if you are trying so many different lenders perhaps it is because you are being declined by them and are franticly trying to find a deal. For this reason you should always approach arranging credit in a systematic fashion.

Find out who has the best deals first, then establish whether or not your circumstances in terms of income, employment history and property type etc fits the lenders criteria before having a decision in principle. As brokers we always assess whether you are eligible to borrow with a lender based on all other information before approaching a lender for a decision in principle.

However if you do have a lot of credit searches and your credit history is reduced this does not mean that you will permanently affected. It is simply a risk assessment measure and as such most lenders will look at the number of searches in the last 3 months. I personally fell foul of this when I was about 21 simply by changing my mobile phone contract too much at the same time as shopping around for a personal loan, but after waiting a couple of months things returned to normal.

One thing that does not apply is searching your own credit report, this either wont show up or shouldn’t be taken into account as it is not a measure of risk. People of all financial backgrounds now check their own credit reports for a variety of reasons many of which have nothing to do with struggling to raise credit and for this reason this should not affect you credit score.

If you need help working out what might be affecting your credit score contact one of our mortgage advisors to discuss your circumstances on 08454594490.

New Mortgage lenders start to fill the adverse & sub-prime mortgage market again.

Over the past few weeks new mortgage lenders have been popping up at quite a pace, with Platform Igroup and Kensington all returning to the market after considerable time away there is at last some possibility for clients with less than perfect credit history to obtain new mortgages although loan to value limits are still strict.

These lenders maintain adamantly in the press that they are lending to prime borrowers only however the truth is that they are lending to customers who would have been considered near prime or very light adverse in the days preceding the credit crunch.

To boot this week also saw the announcement that Aldermore mortgages had opened its doors to the main intermediary marketplace for both residential and buy to let loans, as well as Precise Mortgages adding further new options in the Buy to Let mortgage marketplace.

Kensington and Igroup in particular have filled the much needed whole between highly competitive high street residential mortgage rates and ultra high adverse rates offered by the likes of Platform and Cheshire Mortgage Corp. They have rates ranging between the 4-6% mark which are much more palatable than 8% plus offerings from the other two.

For further information on any of the products from these new lenders speak to one of our independent mortgage brokers on 0845 4594490

Time to end black-boxing

While everyone is up in arms about bankers bonuses and the lending practices that led to the credit crunch the bigger picture of fair and open practices within the financial services industry seems to have fallen by the wayside to a culture of pandering to politically driven objectives.

One thing that most definitely flies in the face of the FSA’s treating customers fairly objective is the practice of credit scoring and what is referred to as black boxing. Black boxing is one of the terms used to describe the elements of a lenders credit scoring criteria that are kept secret and undisclosed.

While I don’t think that using a system of credit scoring is unfair or bad practice I do believe that it is unfair to keep any part of the methodology behind a scoring system secret. Firstly there have been a lot of issues with lenders accepting a decision in principle from an applicant which obviously incurs no cost, and then declining a mortgage application based on the secondary scoring of the application.

There is an obvious issue with this practice particularly where funds are limited in supply in that it leaves the lender open to accept many more applications than they can possibly fund while accepting application fees and booking fees (many of which are now charged up front) and declining an application post valuation. Interestingly many lenders also now include administration fees within their basic valuation fee, or have moved free valuation incentives to the back end of the deal asking you to pay for a valuation then refunding the costs upon completion. Several newspapers have also reported that many lenders are now removing the right for mortgage brokers and consumers to contest valuation figures on deals with free valuation incentives as a way of forcing borrowers into a higher loan to value product.

It’s also well known that while the idea of a credit blacklisting is a bit of a myth it is true that lenders may apply a weighting to their credit scoring systems that is based on geographic location for example. Some streets or postcodes may be dragged down on score based on the lenders experience in the area which may make it more difficult for people residing there to get credit. Now take this concept and how do we know that ethnic groups for example are not being penalised, which would naturally be illegal under racial discrimination laws? The simple answer is we don’t because we can’t see how these decisions are being made. Which means it’s bad for public faith in the industry and consequently the industry as a whole.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. YOU DO NOT HAVE TO PAY A FEE FOR OUR SERVICES AS WE RECEIVE COMMISSION FROM LENDERS. IF YOU PREFER YOU CAN PAY 1% FEE ON COMPLETION AND WE WILL PAY ANY COMMISSION WE RECEIVE TO YOU. SOME BUY TO LET AND COMMERCIAL LOANS ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY
© RIGHTMORTGAGEADVICE.CO.UK 2009-2016
RIGHTMORTGAGEADVICE.CO.UK IS AN APPOINTED REPRESENTATIVE OF JULIAN HARRIS MORTGAGES LTD, AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY. FSA NO 304155
THE FINANCIAL OMBUDSMAN SERVICE (FOS) IS AN AGENCY FOR ARBITRATING ON UNRESOLVED COMPLAINTS BETWEEN REGULATED FIRMS AND THEIR CLIENTS. FULL DETAILS OF THE FOS CAN BE FOUND ON ITS WEBSITE AT WWW.FINANCIAL-OMBUDSMAN.ORG.UK

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