Mortgages for Foreign Nationals
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Mortgages for Foreign Nationals Frequently Asked Questions
Listen below as Michael Webb talks all about mortgages for foreign nationals.
All about mortgages for foreign nationals with Michael Webb.
Can foreign nationals get a UK mortgage?
Yes, and we often deal with foreign nationals who are resident within the UK. They’ve made the United Kingdom their home and are now looking to buy a property here because they intend to stay.
Typically you can buy property if you are resident in the UK – it’s much more complex if you’re not resident here. Usually people in this category can be classed as a high net worth individual – they have an exceptionally high salary or really high levels of assets. These clients will be looking to buy something that’s not your typical property.
There are specialist lenders, typically private banks, that would deal with that. But it’s more common for us to work with an individual that has immigrated to the UK and is living here. In this case you’re certainly able to get a mortgage.
What are the main considerations with a mortgage for a foreign national?
There are some key considerations, including the currency that you’re paid. Here in Suffolk we have a couple of USA air bases, Lakenheath and Mildenhall particularly, but there are others across the East of England. These have lots of American personnel who are paid in US dollars. They don’t pay UK tax on that of course because they’re paid by the United States government. But they can still get a mortgage depending on a lender’s criteria, which might include how long they’ve been in the country.
Since Brexit, the EU regulations have changed and visitors to the UK will now have two types of status. We very commonly get asked if it’s possible to get a mortgage with pre-settled status, or if a client needs settled status in the UK to get a mortgage. The answer is that some lenders do require settled status, while others will accept pre-settled status.
If you have pre-settled status you’re on a five-year journey and you may be quite far along now, based on when the regulations came in. So either way we can help you find a mortgage.
What challenges are there in applying for a mortgage if you’re a foreign national?
The first thing that any applicant will need is to get their documents in order. That’s going to include your ID. Most lenders will require a mortgage broker and potentially their own underwriters or branch staff to see the originals of your ID.
You’ll need your passport with a relevant visa for the UK, or potentially, depending on your status here, you may have a biometric ID card listing your right to remain and right to work. We would need to see the originals of both your passport and your biometric ID card.
Obviously with some countries there are more challenges, but they would typically be dealt with via the visa system. There are different types of visas you can have in the UK, including immigration visas and highly skilled working visas. Or you could be from the EU and have pre-settled or settled status which don’t require a visa.
USA Air Force personnel won’t have visas as they will be here on military orders. That poses another tricky element, but it’s not too difficult to get around if there’s a large enough deposit. In summary, if you’re resident within the UK it should all be fine. Issues with any potential countries would have been dealt with as part of the visa application process.
How does the process work?
You will need to evidence your right to remain and right to work in the UK, and you’ll then need to evidence your income in the same way as any other individual. That means supplying payslips and bank statements. If you’re paid in a foreign currency and you’re paid into a foreign bank then other things may well be requested. You may need to show a much longer track record.
Also, banks will put in currency translations from US dollars to Pounds Sterling to work out what your equivalent earnings are. Some banks allow for currency fluctuations by setting a conversion rate and then only using a percentage of the currency. Some will accept 80%, other banks might use 100%.
Other bits of criteria also apply, and your deposit will be key. Some banks will not allow a gifted deposit if you are a foreign national. It’s because that money is coming from outside of the UK and they do not have the time or appetite for detailed money laundering checks. Your deposit may have to be your own money, held in the UK, not a gift from family in another country. Some banks will accept this, but it’s becoming rare.
If your own funds are held outside the UK, that’s easier, but you can expect a bank or building to want to see that money within the UK banking system before they will release mortgage funds. That way it goes through a money laundering process within the UK banking system. You also need to consider currency fluctuations and how much you can transfer per day or per week based on the regulations.
Another thing that comes up with foreign nationals is that the UK runs a sanctions list. If you appear on that sanctions list for any reason you will not be able to borrow money or transact within the UK financial system. In my experience, however, the types of client we deal with are highly unlikely to appear on sanctions lists, although you will always be checked against them. If any ID checks flag up your name there’s a process to go through to prove you’re not the individual in question.
How much deposit is needed for a foreign national mortgage? How much can I borrow?
Foreign nationals typically need higher deposits, depending on how long you’ve been in the UK. If you have permanent right to reside in the UK you will be treated as a UK citizen. As a result you’ll potentially be entitled to a 5% deposit, or the minimum the market’s allowing at any given time.
If you don’t have indefinite leave to remain, many lenders will ask for up to a 25% deposit and, more importantly, will ask that you have been in the country for at least 12 months. That’s not to say if you have just arrived here, you can’t get a mortgage.
An issue you may face if this is your first time in the UK and you don’t have a UK bank account, is that your credit record will be nonexistent. That can prove a hurdle too far to overcome – that’s why many banks ask for you to have been here for 12 months.
If you are here on a highly skilled migrant workers visa and you’ve only got a 10% deposit, that doesn’t mean that you can’t get a mortgage. Investigate your position with a mortgage broker to understand exactly what the options are.
Can foreign nationals get Buy to Let properties?
This is a question we get asked a lot and the answer is yes. Typically you’ll have to follow the same by Buy to Let criteria as a UK national. Some lenders will allow you to be a First Time Buyer-First Time Landlord, but most lenders want you to be residential homeowners before you enter the Buy to Let arena.
If you already own a home here in the UK and you’re looking to then invest in property, that’s typically open to you based on the usual criteria. It means meeting minimum income requirements, having long enough rights to remain in the UK, having a sufficient deposit and the property being suitable for letting. We help lots of foreign nationals get Buy to Let mortgages – it’s very much a possibility.
How do I apply for a foreign national mortgage?
It’s not as simple as people may think. Navigating the criteria and the marketplace can be quite tricky. In our experience a lot of foreign nationals come to us having been declined by their own bank.
It seems the ideal approach – the bank knows you, they can see your income going in. But what happens is your bank has an element of criteria that doesn’t fit your situation. It might be you’re getting a gifted deposit from abroad, or they want a bigger deposit than you have available. Or perhaps they don’t lend to people with pre-settled status.
So typically borrowers have a lot more success by using a mortgage broker that’s experienced in dealing with foreign nationals.
How do I improve my chances of getting a foreign national mortgage?
Make sure you have all your documents ready. So collect recent bank statements and payslips and your ID – that will make the processing of your mortgage application much easier.
The main way to improve your chances of getting a mortgage as a foreign national is having been in the UK for longer. The longer you’re here, the easier it will be as you have more of a visible track record.
It could be that you’re on a highly skilled migrant visa and you’ve had it renewed multiple times – that gives banks more confidence. Or, you might be further into your pre-settled status journey or have been here so long that you have indefinite leave to remain.
There’s also the potential to take British citizenship. Again, that will mean you’re treated as a British individual applying for a mortgage. So the longer you’re here and the more deposit you have, the easier you will find it.
But don’t be deterred if you haven’t been here 10 years and you don’t have a 25% deposit. Have a chat with a mortgage broker and we will be able to guide you on how the criteria can be tailored around your individual circumstances.
What else do we need to know about mortgages for foreign nationals?
It’s very popular for foreign nationals to buy in the UK and we help lots of people buy property here. The UK has a diverse mix of nationalities that contribute to our society. It’s worth a conversation to discuss your situation – and even if you can’t do something immediately, we’ll guide you on what you’ll need to get onto the property ladder.
Your property may be repossessed if you do not keep up with your mortgage repayments.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
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What else do we need to know about mortgages being declined?
What you will find is that there are fewer declines as a percentage through mortgage brokers compared with people doing this job for themselves. The reason for that is that lenders’ criteria vary a lot and can be complicated.
A recent example I’ve had is where an applicant went to a bank direct. They were a foreign national using a gifted deposit. But that bank does not allow gifted deposits where the funds are held outside the country. Now, as mortgage brokers we would know that. But it wasn’t until it got to the underwriters that this was established and the mortgage was then declined – and they’d wasted six weeks to get to that point.
So there’s a big benefit to using a mortgage broker – we will be able to predominantly get it right first time. We’re not infallible, and we can’t fix people’s credit files, but we can at least take people to suitable lenders that are more likely to proceed to mortgage offer.
Getting it right first time saves you time, potentially saves you valuation fees and application fees too. Don’t try to do it yourself, as it’s challenging to match the situation you’ve got to the most appropriate lender for you.
If you have been declined, we’re here to explain what the next steps are and the route forward to getting you a mortgage offer. In my experience very few people manage to do a full mortgage application that can’t get to a mortgage offer. Even with quite severe adverse credit, If you’ve managed to get an Agreement in Principle, the lender will have checked that adverse credit and is happy to proceed on the basis of it.
Your home may be repossessed if you do not keep up with your mortgage repayments.