Advice for Foreign Nationals seeking a UK Mortgage
If you are a foreign national living in the UK and thinking about buying a property, you might be wondering how to go about getting a mortgage. It can seem complicated, especially if you are on a visa and do not yet have indefinite leave to remain (ILR). But do not worry, with the right guidance, it is definitely possible. Below we will address the common roadblocks and provide advice on how to better prepare yourself for the application.
What Mortgage Options Are Available for Foreign Nationals in the UK?
With over 100 lenders in the UK mortgage market, only 10-15% of them will consider applicants on visas. However, the good news is that an increasing number of lenders are willing to work with foreign nationals who do not yet have indefinite leave to remain (ILR).
Which Visas Do Lenders Accept for Mortgages in the UK?
When it comes to visa types, there are a few that are more commonly accepted by lenders. These include:
Tier 1 (Entrepreneur) Visa: A flexible option, especially for business owners or investors in the UK.
Tier 2 (Skilled Worker) Visa: The most common visa for people working in skilled jobs.
Spousal and Family Visas: These can sometimes be more straightforward, particularly if your spouse or partner already has ILR.
It is important to know that the longer you have been in the UK, the better your chances of getting a mortgage. Lenders are more likely to approve your application if they can see you have built a financial history in the UK.
What Loan-to-Value (LTV) Ratios Are Available for Foreign Nationals on Visas?
Foreign nationals can access mortgages at various LTV ratios depending on their visa type and financial situation. For example:
75% LTV Mortgages are the most common for foreign nationals and tend to come with fewer restrictions.
In 2024, an increasing number of lenders started to offer higher LTV mortgages (up to 95% LTV Mortgages), but they may have additional requirements such as a second applicant with ILR or a certain level of minimum income or certain visa related restrictions.
What Are the Key Challenges When Getting a Mortgage as a Foreign National?
Despite the increased appetite from lenders, securing a mortgage as a foreign national can still be a complex process. As mortgage advisers specialising in foreign nationals, we face three primary challenges when helping foreign nationals obtain mortgages:
Visa Restrictions
Source of Deposit
Property Type
How Do Visa Restrictions Impact Mortgage Applications?
One of the challenges when applying for a mortgage as a foreign national is dealing with visa restrictions. While some lenders are flexible, others are stricter, and you will need to meet certain requirements.
For example, the length of time you have been in the UK is a major factor. While quite a few lenders do not set a minimum time requirement in their policies, in practice, most lenders will expect you to have lived in the UK for at least 6 months before you are able to pass their internal credit scoring.
Another issue is that some lenders will require you to have a certain amount of time left on your visa. For instance, they might only lend to you if you have at least two years left on your visa. The good news is that lenders are increasingly relaxing this requirement, and some will not impose a minimum time at all.
How Can I Prove the Source of My Deposit as a Foreign National?
Proving the source of your deposit can often be the biggest challenge for foreign nationals. When it comes to the deposit, the most important thing is that it is traceable. This means that the lender will want to see clear evidence of where the deposit came from.
Let us explore how you can ensure your deposit is acceptable to UK lenders.
If you have saved your deposit while living and working in the UK, there will not be any extra requirements from the lenders apart from showing the latest 3-6 months of bank statements evidencing the savings (standard requirements for this type of deposit for all types of applicants).
Can I Use a Deposit from Abroad for a UK Mortgage?
Yes, it is possible to use a deposit from abroad for a UK mortgage. This could be a gifted deposit from your family or perhaps a sale of an asset in another country. In such cases, the lenders will require documentation proving the origin of the deposit, such as:
Bank statements showing the transfer of funds from abroad to your bank account.
Gift letters if the deposit is a gift from family members.
Sale documents for funds originating from the sale of property or assets abroad.
Being able to prove the legitimacy of your deposit will ensure a smoother mortgage application process. If you need guidance on how to gather these documents, consider booking a session with a specialist mortgage adviser here.
What About the Property Type?
Foreign nationals often gravitate toward flats or apartments, especially if they are living in a big city where these types of properties are common. This type of property tends to be more affordable and easier to maintain.
Securing a mortgage for flats comes with its own challenges. Lenders are often more cautious when it comes to valuing flats and may even have stringent policy restrictions on lending for such properties.
It is essential to ask the right questions when looking at flats, to ensure that there will not be any issues with the valuation or purchase further down the line.
Steps to Improve Your Chances of Securing a Mortgage
While the process can be more complex for foreign nationals, it is still possible to secure a mortgage with careful planning. Here are the key steps you can take to improve your chances:
1. Start Early: Speak to a Mortgage Adviser
I recommend speaking to a mortgage adviser 6-12 months before you plan to buy a property. A specialist adviser can guide you through the options available for foreign nationals and help you prepare for the mortgage application process. They can also assist in choosing the right lender, based on your visa type and financial situation.
2. Save for Your Deposit Using UK Income
Where possible, save for your deposit using your UK-based income. This makes it easier to demonstrate that your deposit is traceable and comes from legitimate sources within the UK. Regular savings in a UK account will make your application process smoother.
3. Ensure Your Deposit is Traceable
If your deposit is coming from abroad, make sure that all the documentation is in place to prove its origin. This includes bank statements, gift letters, or proof of asset sales. Being organised and transparent with your documentation will help speed up the application process. Discuss with your adviser the best way to ensure that everything is in order when the time comes.
4. Consider Property Type Carefully
When purchasing a property, especially a flat, ensure that it meets the lender’s criteria. Work with your adviser to understand the specific requirements for the property and avoid potential valuation issues that could derail the process.
Conclusion: Can Foreign Nationals Successfully Get a Mortgage in the UK?
Yes, securing a mortgage in the UK as a foreign national is entirely possible, even without indefinite leave to remain. By understanding the process, knowing what lenders are looking for, and working with the right adviser, you can increase your chances of successfully securing a mortgage.
If you’re a foreign national on a Tier 1 or Tier 2 visa (or another visa type), and you’re looking to purchase property in the UK, reach out today. Starting the process early and preparing your documents properly will help ensure your success in securing a mortgage and achieving your homeownership goals in the UK.