Our Guide to Getting a Mortgage with a Foreign Non-EU Applicant
Considering there are approximately 9.4 million foreign-born people in the UK (14% of the population) and 6.2 million non-UK nationals (10%) of the population, it is surprising that some non-UK citizens may still find it difficult to get a mortgage, either on their own or with their UK citizen partner.
At NeedingAdvice, we work with a number of specialist mortgage lenders who offer UK mortgages to foreign non-EU applicants.
There are, however, certain things you need to be aware of. In what follows, we will explain both the challenges and potential solutions.
How can I be eligible to apply for a UK mortgage as a foreign Non-EU applicant?
The first point to be absolutely clear on is that mortgage lenders in the UK make absolutely no distinction whatsoever on the basis of the nationality of the applicant.
What they are interested in is trying to ensure that they are not taking unacceptably high risks when they advance large sums to a borrower, whatever the person’s place of birth might have been or their current nationality.
What checks will a mortgage lender make?
There are a number of checks that mortgage lenders will apply in the UK to try and make certain that the risks they are taking are within acceptable parameters. Typically those checks will include:
- verifying the applicant’s income, over time, in order to try and ensure that they will be able to afford the repayments against the sum borrowed;
- confirming the identity of the borrower, plus evidence of their stability through having a settled place of residence over time;
- that the person they are looking at has a track record of responsible financial behaviour in terms of servicing their existing debts. This is referred to in the UK as a “credit history check”;
- that there is at least a reasonable prospect of continuity going forward for the individual in terms of their employment and residence in the UK.
If you looking for a UK mortgage as a foreign non-EU applicant, it is clear that some of the above factors will be difficult to identify and clarify for a potential mortgage lender. For example, if you have arrived from overseas in the relatively recent past, you may have little to offer by way of credit history or continuity of employment and place of residence in the UK.
What evidence will I need to provide?
When making a mortgage application, you will typically need to provide evidence that you:
- have resided in the UK for at least 24 months;
- work in a permanent job in the UK;
- are in possession of one form or another of longer-term or permanent residency status;
- have a UK-based bank account;
- are able to offer a slightly larger than usual deposit of up to 25% (the deposit is the sum of money you find from your own resources towards the cost of the property).
In a situation where you are unable to show that you have either permanent residency or indefinite leave to remain status, it might still be possible to apply for a mortgage if you’re in possession of one of the following types of visa:
- Tier 1 or Tier 2;
- Family of a Settled Person;
- Residence Card;
- UK Ancestry Visa.
Broadly speaking, lenders will prefer one form or another of permanent residence status, although some may consider applications based upon an ongoing work permit.
The above conditions will apply whether or not you are:
- making an application in a sole name;
- applying for a joint mortgage where both parties are non-EU citizens;
- applying for a joint mortgage, where one of the parties is a non-EU citizen.
What documentation will a mortgage lender require?
It is very difficult to say with certainty what paperwork you will need to produce. Each mortgage lender may have their own standards for that and they will be only too happy to share their particular requirements with you.
As a general rule though, you should anticipate being asked to produce the following:
- evidence of your identity. As the United Kingdom does not operate an identity card system, this will normally be your passport;
- proof that you are legally resident in the UK. This will entail some of the documents as outlined above;
- a range of documents showing your overall income. That will usually include copies of your past bank statements, evidence of your employment in the form of things such as your employment contract and pay slips, P60 benefits statements issued by HMRC and a letter from your employer etc.;
- documents to indicate your normal outgoings. That would usually be in the form of things such as copies of your recent household bills, bank statements and so on. This is part of a legal requirement placed upon lenders to ensure that the person they are lending to will be able to afford the repayments when taken into consideration against the other regular monthly outgoings. This is sometimes called an “affordability test”.
You will normally pass these documents over to a potential lender who will then review them.
At the end of their checks, if all is well, they may outline that you have a mortgage in principle. That is essentially a non-committal indication of the sum of money you might be able to borrow in order to purchase a property. At this stage, this is not a formal offer of a mortgage for a non-EU citizen.
Once you find a particular property that interests you, you will go back to your potential mortgage lender to make a formal full application. At that time, you may have to submit other documents to them relating to the valuation of the property and so on.
It is at that stage that they will consider the totality of your position and if appropriate, offer you a mortgage.
Can I use the Government’s Help to Buy scheme?
The Government’s scheme is aimed at UK residents, not exclusively British subjects.
So you are perfectly at liberty to apply for assistance in this area, though you will also need to meet some of the above-mentioned criteria too.
You can find out more about the scheme on the government’s own official website.
Next steps – Mortgages for a foreign non-EU applicant
There are many variations in the status of individual non-EU citizen applicants.
Identifying the best route forward in terms of securing a mortgage can be complicated and you might benefit from assistance at the earliest stage.
Why not contact us for a further discussion?