Securing a mortgage in the UK is a significant milestone for many, but for skilled worker visa (formerly, Tier 2 Visa) holders, it can seem like a Herculean task!
After all, Mortgage approvals in the UK dropped significantly, declining from 74,425 in August 2022 to 35,612 by December of the same year. Yet, the prospect of homeownership is not impossible.
Well, to begin with, foreign nationals can get a UK mortgage. Having a UK passport isn’t necessary; instead, you can apply for a foreign national mortgage.
Specifically for Skilled Worker/Tier 2 Visa mortgage, the process remains fairly similar and simple, to say the least.
Long story short – mortgage approval for Tier 2 Visa holders in the UK depends on financial stability, creditworthiness, and visa duration, along with standard property-related checks.
But we understand that you need to know about all the intricacies within the process, along with expert advice on foreign national mortgages, to make a sound financial decision.
So, keep reading, and let’s turn your homeownership dreams into a reality!
Table of Contents
- What is a Tier 2 Visa in the UK?
- What Is A Tier 2 Visa Mortgage?
- Deposit Requirements For Skilled Worker Visa
- Foreign National Mortgages Interest Rates
- When Is The Best Time To Apply For Tier 2 Visa Mortgage?
- How To Get A Mortgage As A Foreign National In The UK
- Factors To Consider When Applying For Skilled Worker/Tier 2 Visa Mortgage
- Can You Get A Skilled Worker Visa Mortgage With Bad Credit?
- Can You Get A Buy-to-let Mortgage With A Skilled Worker Visa?
- How To Choose A Suitable Tier 2 Visa Mortgage Lender
- Conclusion
What is a Tier 2 Visa in the UK?
Tier 2 Visas (now Skilled Worker Visas) serve as the primary immigration pathway for skilled workers seeking employment in the UK.
To obtain a skilled worker visa, you must have a job offer and a certificate of sponsorship from your prospective employer.
Notably, a minimum of 70 points is required in the UK’s point-based immigration system, evaluating factors such as salary, educational qualifications, and language proficiency.
However, specific criteria may apply based on the category of Tier 2 Visa needed.
What Is A Tier 2 Visa Mortgage?
A Tier 2 Visa mortgage is not a distinct product – it’s a regular mortgage with adjusted application criteria.
So, contrary to popular belief, foreign nationals with Tier 2 Visas can usually access mortgages, provided they are financially stable.
Consequently, lenders assess mortgage applications based on creditworthiness and affordability, typical of property purchases. But, additional considerations include the duration of UK residency and remaining visa validity.
Plus, lender requirements may differ, with most requesting at least two years of UK residency to establish a strong credit history. On the contrary, those earning over £100k per year may qualify within less than a year in the UK.
Keep in mind that stricter terms can lead to better rates after three years. Here’s a quick rundown of what lenders usually look for:
- The remaining validity of your current visa
- Duration of UK residency
- Verification of identity and residency (e.g., passport and visa)
- Income proof (e.g., payslips for the last three months)
- Proof of your name and address (e.g., recent utility bills or current-year council tax letter)
- Overview of monthly expenses and existing debts
Deposit Requirements For Skilled Worker Visa
As long as you meet the eligibility criteria posed by the lender, you can secure up to 90% Loan-to-Value (LTV) mortgages with a 10% deposit.
However, a large deposit of 15-25% opens access to more lenders and better deals, ensuring favourable mortgage terms.
One lender may be available with a 5% deposit so we recommend speaking to a qualified mortgage broker as they can find the best deal for your circumstances.
Foreign National Mortgages Interest Rates
As a Tier 2 Visa holder, mortgage lenders may view your application as a high-risk one, potentially resulting in higher interest rates.
However, your credit history, deposit size, income source, and property type may also affect the mortgage rates.
As such, with financial stability, no credit issues, and an experienced mortgage broker, you may bag an affordable mortgage offer with interest rates ranging between 4% and 6%.
You can connect with one of our mortgage advisors for further details and get a quote.
When Is The Best Time To Apply For Tier 2 Visa Mortgage?
Timing is crucial in the mortgage application process for Tier 2 visa holders. Applying with less time left on your visa, albeit possible, could be costlier and limit lender options.
As such, applying after a couple of years in the UK with a longer visa duration can lead to cost savings on your mortgage.
However, before you apply, create and maintain a British bank account to establish a solid credit history in the UK.
Also, permanent UK employment can boost your mortgage prospects, signifying long-term commitment and job stability.
How To Get A Mortgage As A Foreign National In The UK
1. Verify Your Eligibility
First off, confirm the accessibility of your visa, duration of stay in the UK, and the amount of deposit required. Prior research on these aspects is essential before committing to a mortgage application.
2. Improve Your Chances Of Approval
Certain aspects of a foreign national mortgage application can enhance your approval prospects.
These include maintaining an active UK bank account with direct debits to bolster your UK credit history and holding a permanent contract with a UK-based company.
3. Consult A Broker
Applying for a foreign national mortgage involves more paperwork than a UK resident’s mortgage.
A broker can help organise your application, recommend suitable lenders based on your situation, and ensure you’ve gathered all necessary documentation.
Factors To Consider When Applying For Skilled Worker/Tier 2 Visa Mortgage
1. Find An Experienced Solicitor
It is essential to engage a solicitor familiar with Tier 2 visa requirements. While it may sound like an added expense, their expertise can help you through the legal process, making you aware of cost and timeline estimates.
2. Consult A Mortgage Broker
As mentioned earlier, yet another important role in the process is that of a mortgage broker. They can help assess your financial status and advise you accordingly on property purchase. They will also help you understand all the details of mortgage eligibility and repayment options.
As such, choosing a reliable and knowledgeable broker is crucial for informed decision-making.
3. Search For The Right Property
Start by understanding your rights and restrictions as a Tier 2 Visa holder before starting your search. Also, define your preferences, including location, size, property type, and budget.
Once you’ve narrowed down your options, explore potential properties with the help of an estate agent.
4. Make An Offer On Property
Tier 2 Visa holders have the same property-buying rights as UK citizens. So, collaborate with experienced professionals, adhere to regulations, and conduct thorough market research.
We also highly recommend understanding property availability and price ranges to avoid overpaying.
5. Conveyancing Process In The UK
Tier 2 Visa holders seeking UK property ownership must go through the conveyancing process, which involves transferring property ownership from seller to buyer.
In this step, it’s essential to have an experienced solicitor who ensures legal compliance and handles paperwork, negotiations, and contracts.
On top of that, a mortgage broker can help provide mortgage advice, financing assistance, and insights into potential risks.
6. Completing The Purchase
After completing the conveyancing process, the final step is payment, which requires awareness of associated costs, including Stamp Duty and Land Registry fees. Once these costs are settled, the solicitor can submit the application to the Land Registry.
Then, you will receive the Certificate of Title, confirming your legal property ownership in the UK, enabling you to complete your property purchase.
Can You Get A Skilled Worker Visa Mortgage With Bad Credit?
If you’ve faced credit problems in the past and are concerned about securing a foreign national mortgage in the UK – fret not. While bad credit can complicate or delay your application, it won’t automatically lead to rejection.
Lenders will assess your application comprehensively, considering factors like your deposit size and income.
However, being perceived as a high-risk borrower may limit your product options and result in higher rates.
That said, your credit score may depend upon the following factors-
- Default payments on agreed obligations like phone bills or prior mortgage instalments
- Outstanding credit card debt
- County Court Judgements (CCJ) requiring missed payment compensation
- Use of payday loans, i.e., short-term loans indicating potential financial strain
We suggest improving your credit score first, as most credit issues in the UK clear after six years, broadening your mortgage choices.
Then, you can consult an experienced mortgage broker for tailored guidance on your best course of action.
Can You Get A Buy-to-let Mortgage With A Skilled Worker Visa?
If you want to purchase property for rental purposes as an investment with a Skilled Worker (Tier 2) Visa, you’ll need a buy-to-let mortgage.
These loans are accessible but come with stricter criteria and higher costs compared to residential properties.
Typically, a larger deposit is required, and some lenders may request a business plan outlining your investment strategy.
How To Choose A Suitable Tier 2 Visa Mortgage Lender
Unfortunately, not every mortgage lender will consider an application from a Skilled Worker/Tier 2 Visa holder.
In fact, many mainstream banks and building societies may not cater to foreign nationals as they lack experience in processing such mortgage applications.
Also, most mortgage providers often reject applications with complications like credit issues or foreign nationality. That’s when specialised lenders enter the scene with competitive rates.
To access a broader array of suitable mortgage products, we recommend connecting with our mortgage advisors.
We have the expertise, networks, and lender connections, that allow us to provide you with access to otherwise inaccessible deals through independent research.
Conclusion
So, you see, a foreign national holding a Skilled Worker/Tier 2 Visa can apply for a mortgage in the UK, albeit with stricter criteria and conditions.
From understanding your visa rights to working with experienced professionals like solicitors and mortgage brokers, the process can be navigated successfully.
By conducting thorough research and maintaining a good credit score, Tier 2 Visa holders can overcome the challenges and secure their dream property in no time!
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.
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