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Mortgage For Non-UK Residents

Are you looking to get a mortgage in the UK as a non-resident? Then check out this guide that discusses everything you need to know about non-UK resident mortgages.
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Foreign nationals and expats have always had a noticeable presence in the UK. And with the rise in globalisation recently, this number has only increased.

At present, there are roughly 9.61 million non-UK-born residents living in the country. And if recent trends are anything to go by, they are only expected to rise in the future.

Naturally, food, education and housing are important amenities for these individuals looking to settle in the country. However, if you are a non-resident who recently moved to the UK, you may have concerns about getting mortgages for housing.

That is why we have discussed non-UK resident mortgages in this guide. 

Such mortgages are specifically meant to help out foreign nationals looking to buy property in the country. Read on to know how to get a mortgage for non-UK residents easily.

Is It Possible To Get Mortgages For Foreign Nationals In The UK?

First, let’s address the question that most expats and foreign-born UK residents tend to ask – are foreign national mortgages available in the UK? Well, the simple answer is – yes, it is entirely possible to get a mortgage in the UK as a foreign national.

Get Mortgages For Foreign Nationals In The UK

In principle, these foreign national mortgages are no different from any standard commercial or residential mortgage. Also, lenders do not necessarily require a UK passport to evidence UK nationality when approving any type of standard mortgage, such as residential, buy-to-let or refurbishment

With that being said, foreign national mortgages do come with higher risks, which is why not all lenders may be willing to approve them as easily.

Who Can Get A Non-UK Resident Mortgage?

Generally, you can get a mortgage for non-UK residents if you fall within any of the following three groups:

  • EU Citizens
  • Non-UK residents with permanent residency or indefinite leave to remain
  • Non-UK residents without permanent residency 

If you belong to the first two categories, then it might be comparatively easier to get a mortgage. 

As long as you have a UK bank account, have a permanent job, and have lived for at least three years, lenders typically may not raise any objections to the mortgage, as you have a UK footprint.  

However, non-permanent residents pose a greater risk, which is why you may need to provide additional documentation to get the mortgage. 

What Are The Guidelines Followed For Non-UK Resident Mortgages?

1. Type Of Visa

The first thing that lenders will check is the type of Visa you have. On that note, lenders consider some visas to be preferable to others. 

For instance, if you have a student visa, the lenders may not approve your mortgage easily. That’s because this visa type is usually issued to students, who generally don’t have a stable source of income and are often temporary residents.

In contrast, if you have a work or family visa, it will indicate stronger and more permanent proof of residency. That, in turn, will make it relatively easier to get the mortgage.

Each lender will have its own criteria. 

2. Time Left On The Visa

If there is a lot of time left on the Visa, then lenders will be more willing to approve the non-UK resident mortgage. 

A longer expiry time indicates that a person will remain in the country for an extended period. Thus, there’s a high chance that the borrower will be able to repay the mortgage fully, thereby reducing the financial risks.

On the other hand, a Visa that is expiring soon is much riskier by comparison. Naturally, the lender may not approve the mortgage as easily in this case.

3. Time Spent In The Country

A lot of lenders will check how long you have lived in the country before approving the mortgage. 

Needless to say, the longer you have lived in the UK, the better your prospects will be for getting the mortgage in most cases. 

Most lenders will require non-UK residents to have lived in the country for at least one year. If you have lived less than that, then you may not be able to get the mortgage. 

On that note, some lenders may have an even longer requirement of five years.

4. Source Of Income

If you have owned, currently own or are a  first-time buyer who is applying for a mortgage in the UK as a non-resident, then you will naturally need to prove your source of income to the lender. This information will be used to determine whether you can afford the mortgage.

For example, if you have a stable, high-paying job in the country, lenders will be more comfortable that you are able to afford and repay the mortgage easily. 

On the other hand, if you are self-employed, then your income source might be relatively unstable, which raises more concerns for a lender. .

5. Credit History

Lenders will always check the borrower’s credit history before approving a mortgage. This is applicable to everyone, and not just foreign nationals. 

Obviously, if you have a good credit history, it will be easier for you to get a mortgage. However, if you have bad credit, then it might be difficult to get a mortgage. 

Fortunately, there are a few strategies that you can follow to get a mortgage on bad credit, even as a non-UK resident. 

A strong credit profile is essential for non UK residents as the more bureau information a lender has when completing the decision in principle and then application the more likely they are to lend. 

How To Get A Mortgage For Non-UK Residents

The process for getting a mortgage for non-UK residents is not that different from getting any standard mortgage plan. For your convenience, we have discussed it below:

Step 1: Check Eligibility

First, you will need to check whether you are eligible for the mortgage or not. So, you will need to consider your Visa details, income source, time living in the UK and so on. If you wish, you can seek help from a mortgage broker or financial advisor to make this process easier.

Step 2: Gather The Documents

Next, you will need to gather all the relevant documents that will be necessary for the mortgage.

This includes all your Visa documents, residence cards and so on. In this regard, documents like UK bank statements, proof of income and detailed credit records in the UK can help boost your chances of getting a mortgage. 

Apart from these, you will be required to provide proof of address and identity. Make sure that the information on these documents is up to date. 

Step 3: Find And Contact A Suitable Lender

Now, you will need to do some research to find the best possible lender for your needs. If you have a broker, then they can refer you to a suitable lender, making the process easier. Once you have decided, get in touch with the lender to apply for the mortgage.

Taxes, Interest Rates And Other Costs Of Getting A Mortgage for Non-UK Residents

Since mortgages for non-UK residents are considered to be riskier than regular mortgages, the interest rates may be a higher as it is not as simple as going to the cheapest available lender on rate. 

In this regard, the interest rates for mortgages are heavily centred on the bank rate set by the Bank of England.

At the time of writing this article, the bank rate is at 5.25%, which means that the interest rates for foreign national mortgages will be slightly higher than that typically (based on lender pricing this can be deviated from). .

Additionally, the deposit amount you have to pay for a mortgage as a non-UK resident is higher. Normally, UK residents can get mortgages with deposits as low as 5%.

However, in the case of a mortgage for non-UK residents, the initial deposit amount is likely to be much higher at 20% or more.

On top of that, the tax rates for such mortgages are slightly higher as well. To be more precise, the rate for Stamp Duty Land tax can be roughly two percentage points higher for foreign nationals who fall within the remit.

Conclusion

As you can see from the discussion above, it is fully possible to buy a property in the UK using foreign national mortgages. 

However, we recommend ensuring a strong residential and financial status before applying for such a mortgage.

If you are feeling uncertain, then you can definitely seek help from a qualified financial advisor/mortgage broker. 

After analysing your circumstances, they can provide you with a tailored solution that will help with your goal to purchase property in the UK.

Your home may be repossessed if you do not keep up repayments on your mortgage.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.

Our goal is simple - to provide most up-to-date and accurate mortgage information to make your mortgage journey as stress-free as possible. Have a question? Fill up the quick form and one of our mortgage advisor will connect with you.

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