Lenders have strict criteria for foreign nationals living in the UK on Tier 1 and Tier 2 visas. Many will require a large deposit, which can rule some applicants out entirely.
In this article, we will look at some of the factors that will influence lending decisions for some of the biggest lenders. In many cases, foreign nationals will be better served by approaching a niche mortgage provider to help secure a better deal.
These are the things you will need to consider when trying to secure a mortgage in the UK as a foreign national.
The trade-off for many applicants is pretty clear. If you are unsure if you are even eligible for a mortgage, then any rate you are offered may seem like a fair price to pay to be able to purchase a property. However, it still pays to shop around. Rates vary by lender and then by their criteria. So an applicant with a 10% deposit and poor credit could be offered a similar rate to an applicant with a 5% deposit and excellent credit. That said, offering as much of a deposit as you can afford will help to bring down your rate. The difference between a 60% LTV mortgage and a 95% LTV mortgage could be significant.
Some lenders will differentiate between the types of visa, saving their best offers for applicants living in the UK on a Tier 1 visa. This treatment will vary between lenders so it helps to work with a mortgage broker who knows the market. If securing a 95% LTV mortgage is important to you, then we can help to match you with a broker who can help to make this happen.
Lenders are concerned with the stability and affordability of your mortgage. This means they often look for a long working history to show that your job and income are stable. Many lenders will want to see evidence that you have been living and working in the UK for 6-12 months before your application. Depending on your visa status, some will want to see that you have been living and working in the UK for up to 3 years before granting a mortgage. This can limit your choice of lenders but wouldn’t necessarily be an issue.
The majority of foreign nationals often want to purchase new-build flats in popular areas. This type of purchase is often seen as a higher risk for lenders, so they might be more reluctant to offer a high LTV for this type of property. You could adjust your search to include older buildings or even houses, or you could approach the right lender. As a foreign national looking to purchase a new build flat with a 5-10% deposit, you can expect to have a more limited pool of lenders to choose from.
The best option for a foreign national looking to secure a mortgage with a small deposit is to work with an experienced broker. There are so many factors to consider, from the type of employment to the source of your deposit. It’s not uncommon for lenders to reject applications when the deposit is a gift from abroad. An inexperienced broker might not know this, and so you could waste months waiting to apply again following a rejected application.
To avoid this, we recommend working with a whole-of-market broker to help find the best possible deal. While it might be cheaper to go it alone purely from the perspective of the fees you pay, it could cost you a lot more over the lifetime of the mortgage. Speak to our team about first-time-buyer mortgages for foreign nationals and start your journey to homeownership in the UK.