In this article, we will look at everything you need to know about getting a mortgage as a refugee. We will look in particular at those with refugee status and not asylum seekers. However, as many of these steps require years of preparation, this could be considered as a future guide for those with asylum seeker status.
According to the United Nations, around 124,000 refugees are living in the UK. While not the most generous country, the UK is also not the least generous. Those who make it through the complex system and secure the right to live in the UK may soon discover that the second hurdle is homeownership. The steps required to secure a mortgage as a refugee are by no means simple.
As a specialist mortgage broker, we have experience working with individuals from all walks of life. Before we explore the process of securing a mortgage, it’s worth considering how mortgages work in the UK. The UK mortgage differs from many places throughout Europe and around the world.
Around 65.5% of the UK population owns their own home. This is lower than in many European countries, despite having a mortgage application system that makes it easier for individuals to purchase a home. Throughout Europe and the rest of the world, it is far more common for lenders to ask for a deposit of at least 25% of the property value. In the UK, lenders are more willing to offer a high LTV, with a deposit as small as 5 or 10% available in some cases.
While this might be an advantage for those with citizenship, this type of mortgage is rarely extended to those in the UK on a visa. Most applications from those on a visa will require a 25% deposit. This may be waived if the individual is applying as part of a joint mortgage application with another person who has full residency in the UK.
To determine how much an individual can borrow, lenders will look at something called an income multiple. This usually means around four to five times your annual income. If you have a daily rate rather than an annual salary, this will be calculated as 5 times your daily rate multiplied by 46 weeks, to allow for holiday leave.
As a refugee, you will need to have been in the UK for 12 months before being permitted to work. And when applying for a mortgage, many lenders will want to see at least 6 months of employment history. This could be as high as 12 months in some cases.
This means that you typically need to have been living in the UK for 18 to 24 months before a mortgage is possible. If you are self-employed, this time could be even longer as you might need two-years of accounts.
Another thing to consider when thinking about applying for a mortgage as a refugee is the availability of documents. You will need to provide evidence of the source of your mortgage funds to satisfy international money laundering checks. By working with a company like Niche Mortgage Info, we can provide advice and support on the mortgage process for refugees. We can advise on the visa mortgage market and how best to navigate the checks and procedures.
If you already have a mortgage on a UK property, remortgaging will follow the same process. The pool of lenders available to you will be smaller, so it’s important to speak to a specialist mortgage advisor to ensure you don’t pay more than you need to for your lending products. If you are thinking about purchasing a buy-to-let property, be aware that this is only open to refugees that already own an existing UK property.