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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.

Is a 10 year fixed rate mortgage a good idea and should you get one?

10 Year fixed rate mortgages have been reducing significantly in cost, and for the first time in the UK it’s now possible to get a pretty competitive rate fixed for 10 years but the big question is; should you get one?

Question 1- Is a fixed rate even appropriate for you?

Forget 10 years. Should you even have a fixed rate mortgage?

Lots of people are caught out by significant early repayment penalties due to not properly considering the question of their long term plans before buying.

Will you be moving home, repaying large balances early, hoping to raise significant additional finance from the property or could you be eligible for better deals in the short term if your own circumstances improve?

Before even considering a fixed rate mortgage you should take a look at our guide to fixed rate products and see how they work versus other types of rates, and pay real consideration to whether the points above could leave you paying redemption penalties of many thousands of pounds.

You should definitely speak to an independent mortgage broker like us as well.

Question 2 – Will fixing for 10 years be competitive long term?

If you had a crystal ball you could answer this question, but no one can see into the future.

When a lender prices a product it’s either based on the cost of loaning that money from another bank or investor and turning it into mortgages or on the expected rate of interest they will pay to their own depositors over that time.

So the simple fact is that a fixed rate mortgage will be priced based on the expectations of what will happen to interest rates over the term and the Bank will be expecting to profit.

That means the current glut of competitive long term fixed deals indicate that the banks expect a prolonged period of relatively low interest rates in the UK well into the future.

So like odds given by bookies, most banks won’t be expecting average interest rates over the fixed period to be higher than the rate they are offering you. So you are in effect betting against the bank, but they have to be known to be quite spectacularly wrong in the past.

The smaller your mortgage though, and the shorter the remaining term (for someone on a repayment or capital and interest mortgage) the less differences in rate will impact long term cost.

Because of this for each loan there will come a point as remaining term decreases when small differences in rates are outweighed by the repeated fees and charges involved in refinancing a mortgage, and changing product regularly becomes poor value for money.

This is very case specific, but once your mortgage reaches that point the potential downsides of long term fixes may become insignificant.

Question 3 – So who should take a 10 year fixed rate mortgage?

If you are very worried about increases in costs, have no circumstances that would indicate other rates like variables could be preferable, and very sure that the early repayment penalties won’t be likely to cause an issue then you just need to decide whether you feel it’s worthwhile gambling long term and risking paying more than you might need to or whether to take a short term product in the hope that you can secure another competitive rate again in a few years.

This decision is mainly going to come down to the margin between short term fixed rates and long term ones and the probability that changes to your own circumstances make better deals available to you in the short term (such as better income making more competitive lenders available, or works to a property decreasing your loan to value), and whether you feel the additional cost is good value for the extra security.

A mortgage advisor such as ourselves will discuss your circumstances with you and give guidance on whether a fixed product is really more appropriate for you. If a fixed rate is the best option for you, but it comes down purely to a decision between long and short term deals then this is very much a decision best made by the customer, but at least we can present to you the best options available over the different periods so you can make a more informed decision between them.

If you’d like to know what the best deals available to you both in the short and long term could be then complete out enquiry form and an advisor will contact you, to discuss your options and provide you with advice.

Buying a Property at Auction & Need a Mortgage? – Read our Do’s & Dont’s for Auction Finance

Do:

Your research…

Go to at least one property auction before you intend to purchase, just to see how they work.

Go and view the property you’d like to buy, at least once.

Compare the price and condition of the property to others that are similar that have recently sold or are currently on sale in the street/area. This will help you determine what you think the true market value of the property is and how much you are prepared to bid for it. Websites like Zoopla offer lots of information on previous purchase prices and average prices in the area.

Get a survey/valuation of the property in advance of the sale if this is possible.

Get hold of the Legal Pack and get a solicitor to check it prior to the auction. This pack contains all the information that your solicitor would normally check if you were buying a property in the more conventional way and usually includes key information such as special conditions of sale, title deeds, searches, leases and any legal issues.

Take advice from a mortgage broker or adviser on the suitability of the property for raising a mortgage.

If you can get a mortgage approved on the property prior to the auction or if not get a Mortgage Decision in Principle and an application near ready to submit, before you go into the auction room as you will usually need to complete within 28 days or forfeit your deposit.

Get initial quotes for remedial work if the property needs considerable work. You might be surprised at how much these jobs will cost – better to know up front than after you’ve made your purchase.

Ensure you have sufficient funds available for costs and remedial work if considerable as your mortgage lender will very likely retain part of the mortgage amount until these works are completed.

Have your deposit ready for payment on the day – usually 10% of the hammer price.

Don’t:

Bid on a property at auction that you haven’t seen and looks to be a real bargain in the auction room – there’s probably a reason why no-one else is bidding on it.

Get carried away in the auction room – know your maximum bid before you arrive and don’t get into a bidding war that pushes you beyond this maximum – be prepared to walk away.

Presume you’ll be able to get a mortgage after the event – you may need to shop around or get independent advice. If you can’t pay the balance within 28 days of the auction you will pay hefty interest and possibly forfeit your deposit.

For mortgage advice on short term finance for property auctions visit us here rightmortgageadvice.co.uk

How offset mortgages work: The basics of offsetting explained Rightmortgageadvice.co.uk

An offset mortgage has a linked savings or current account and rather than receiving interest on money paid into that account you don’t pay interest on the same balance of your mortgage.

You can normally set an offset facility to work in two ways. It can act as an over payment reducing your mortgage term or you can opt to make it reduce your monthly payment instead.

The main benefit of using an offset account against over paying your mortgage is the fact that you can readily access the funds in the future without having to refinance although this would affect your payments or term.

You can also use it to borrow money in advance but only pay for it when you take the money out of the offset account although again you need to consider how borrowing extra money will effect interest rates, loan to value and arrangement fees too.

Offset isn’t really a type of product so you can still get all the normal types of rates with an offset facility such as fixed, discount and tracker deals for example.

The main thing with any mortgage is to make sure any additional cost you have to pay in order to get this option will be justified by the benefits you receive and that is something we can consider for you in the advice process. You can get more information or to get expert advice on offset here

Mortgage Broker Q&A – Is it safe to use small regional lenders or would I be better protected borrowing from a larger bank?

This is a really interesting question for me as it crops up quite a lot however it’s important to remember that borrowing from a bank is not the same as depositing money into it.

Firstly on the reasons you should use small regional lenders, they are currently leading the market in terms of mortgage and savings rates and you may well find their customer service slightly less like dealing with a brick wall! There really are some cracking products being delivered by small regional lenders at the moment and there is really very little reason to shy away from them.

If you were a mortgage borrower with an institution that failed then there would be very little likely-hood of the administrators coming round with repossession orders even if the law permitted them to do so (which I am pretty sure it doesn’t but I am not a solicitor), because selling an entire loan book would be ludicrously complex and probably produce a much lower return than simply selling the book of loans to another institution, something which is in fact very common trading by Banks anyway.

Even in the event that there was no one forthcoming to purchase the loan book, the administrators would simply let the book run and pass administration to an outsourcing firm – again quite common.

The government currently in power has made it clear that it will not allow any financial institution in the UK to fail regardless of its size. The FSCS or Financial Services Compensation Scheme currently does not discriminate between the size of institutions either so as long the provider is a part of this scheme and falls under UK regulation this is not affected.

Mortgage Broker Q & A – Removing a party from a mortgage

Question – I have a joint mortgage currently and we want to change it to being solely in my name or my partners what do we need to do?

Firstly you need to establish whether your existing mortgage is still within any tie in period and what penalty there is if so. Then you need to check with the lender whether they are happy for the mortgage to be in only one of your names, which will mainly come down to their assessment of whether it is affordable to you as a single applicant.

They will re-assess the affordability of the case as if it was a new mortgage. If they are happy that you can afford it alone then a new mortgage contract will be required and there will be costs involved with the legal process of making the transfer of equity. However if they are not happy you will not be able to make the change without finding a lender that does believe you can afford the mortgage in your sole name. As it’s a contract the only way to make the change if your existing lender is not satisfied is to change lender and this is where it becomes important to consider any early repayment charges and whether it is best to wait until these penalties cease.

As well as affordability the lender will usually re-assess you as a credit risk and possibly the property value. If however you are considering this because of an impending bankruptcy this will not actually prevent the property from being seized which is a common myth.

As usual if your need further information about this call 0845 4594490 to a speak to a mortgage advisor about your own circumstances.

Why the rate loading Mr Lender?

When a mortgage broker arranges a mortgage for a borrower the commission they receive (if they take the commission as opposed to a fee) is not standardised but there is however only a limited difference from lender to lender. Typically the percentage is about 0.3 to 0.35% for a residential mortgage with good credit, 0.40 to 0.45% for buy to let mortgages, and slightly higher for adverse credit applications.

Why then are several banks, one of which I won’t name but is almost entirely government owned (guess who?) is loading rates available via intermediaries by anything up to 1% against an equivalent product available through them direct? If these lenders are proposing that it costs them more to accept intermediary applications this is farcical.

They may argue that the intermediary market would simply direct too much business to them which they don’t have funds to supply. This is plausible but I think it is actually pricing intermediary products out of the market to attract business from consumers direct who can then be goat herded into higher rate products with down valuations and clandestine credit scoring, or even lower rate products with ridiculous fee’s which are more expensive in reality. Without a broker to argue the case and guide on fee’s most people will simply accept being cascaded to a higher rate without asking difficult questions, or being declined an application having paid for valuations and the like.

I want someone to actually put the question to these banks, how is this rate loading fair practice and why is it in place? Because to the educated it seems to be the intention to get mortgage advisors out of the market so that dodgy products can once again be sold in bulk. Just look at the return of long early repayment charges on market leading rates as a sign that lenders are looking for ways to lock customers into potentially crippling mortgage rates.

Woolwich respond to criticism with revised rates

The Woolwich have responded to criticism around their stepped tracker rate which with a current headline rate of 1.98% is one of the lowest rates available in the market. I commented on the fact that the product was restricted to mortgages between 200K and 500K severely limiting its market when I announced the new rate here a couple of weeks ago, theses restrictions have now been removed and the rate is available for loans between 5K and 1 Million now from today.

They have not chosen to address however the lengthy tie in for five years with a 2% early repayment charge which could make the product very costly in the long term.

Instead they have released a new lifetime tracker at bank base rate +2.29% with a £999 application fee available up to 70% loan to value or at +2.69% with no fee again to 70% loan to value. The new products have early repayment charges of 1% for 2 Years making them much more favourable but crucially both allow you to switch to a later fix without penalty too.

Both products would have a valuation fee of £295 for a purchase at 70% loan to value with a mortgage of 100K and lender Conveyancing fee of £126 giving an APR of 2.9% and 3.3% respectively.

As usual always read the separate Key Facts Illustration prior to making a decision on a mortgage product and to speak to a mortgage advisor call 0845 4594490.

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. We do not usually charge a fee for mortgage advice although you do have the option to pay up to 1.5% of the loan amount. Some buy to let and commercial loans are not regulated by the Financial Services Authority.

Mortgage Broker Q & A. Interest only or repayment mortgage?

In Q & A we take a look at some of the questions mortgage advisers deal with on a regular basis.

Question; what are the pitfalls and benefits of an interest only mortgage?

They say life is all about risk, and this question is a prime example.

If you want the certainty that your mortgage will be repaid as long as you keep up your payments then you should definitely take a repayment mortgage.

However if the cost is too high in the short term however you could take an interest only mortgage and move to a repayment mortgage later although you should be aware that interest paid will be dead money and not reduce your debt.

If you take an interest only mortgage in the long term you are gambling that by investing wisely you can outperform mortgage interest rates on your investment return and produce a surplus by the end of the mortgage. However if your investment does not perform as planned then there will be a shortfall which you will have to find elsewhere.

It should be remembered though that your investment will not only need to outperform mortgage interest rates as you will pay interest on the full balance of the mortgage for the full term. Whereas if you took a repayment mortgage the capital part of your payment would gradually reduce the interest element and so like for like you will repay more interest over the term on an interest only basis as well.

Mortgage Broker Q & A – Mortgage on a freehold flat

In Q & A we take a look at some of the questions mortgage advisors answer on a regular basis.

Question; I have been told it’s difficult to arrange a mortgage on a freehold flat, why is this?

In a freehold you are responsible for the maintenance and insurance of the building and own the land on which it is built, which in the case of a normal house is a good thing.

However in the case of a flat this means that there is no clear definition around who is responsible for which parts of the building. Your roof is your neighbour’s floor and your floor is someone else’s roof.

Imagine then that your upstairs neighbour leaves his bath running and your roof collapses, whose responsibility is this now? If your neighbour has no insurance then it could get pretty messy and that’s why as a mortgage lender it’s a bit of a no go area.

This problem can also occur with what’s known as a flying freehold, this is a maisonette or house where some of the property extends over or under another property on a freehold tenure.

If you are in need of a mortgage on such a property they may be steps you can take to go about getting one so call 0845 4594490 to speak to a mortgage advisor for specific advice on the area.

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
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