If you are a foreign national living and working in the UK with a tier 2 visa, you may be wondering if you are able to take out a mortgage loan. You may be interested in buying a property in the UK as a long-term investment or depending on your work contract and personal situation you may wish to buy a property on a temporary basis until you move back to your home country instead of renting your accommodation.
In this guide we look further into tier 2 visa mortgages.
Tier 2 visas allow foreign skilled workers to live in the UK and work for an approved employer. Visas last up to 5 years before you are required to renew the visa. You will also be required to update your visa when you change jobs or employer. Providing your employment is ongoing and you meet the government’s eligibility requirements, there shouldn’t be issues with extending your visa as many times as you require.
One of a lender’s main concern on lending for a mortgage loan is that they want to be sure you are potentially allowed to stay in the country long enough to be able to pay the monthly mortgage repayments for the full term agreed so they will look at how long you have left on your tier 2 visa. As a contingency, they may ask a borrower to provide a bigger deposit as a way to counteract some of the risks involved and to ensure they have enough equity in the property. In the unfortunate event that they have defaults in repayment, they will be required to repossess the property and sell it to cover the mortgage loan. Deposit size will also depend on other factors such as your affordability. The more you can put down for your deposit, the more it can strengthen your application and may increase your chances of being accepted for a mortgage loan.
Employment, affordability and credit checks
Lenders will be interested to know how long you have been a resident in the UK if you have a tier 2 visa. Generally, they prefer applicants with tier 2 visa to have lived and worked in the UK for minimum 2 to 3 years. This will allow them to be able to assess the borrower’s credit history and a record of employment.
As with any mortgage loan application, lenders will want to check an applicant’s credit history as this will give them an indication of their credit worthiness and how reliable of a borrower they may be. Any CCJs, defaults or IVAs will leave a negative impact on your credit report. Having bad credit doesn’t entirely mean you won’t be able to take out a mortgage, but your options might be further limited, and lenders will assess this by considering the seriousness of the adverse credit and how long ago it was.
Every lender will check an applicant’s affordability and this assessment is to calculate whether the borrower would be able to afford the monthly mortgage repayments. You will be required to confirm your employment and income and they will use this to compare with your monthly outgoings, paying close attention to any loans you are currently paying off, to work out if you earn enough to pass their affordability checks.
Although tier 2 visa holders are able to take out a mortgage loan in the UK, your options in lenders and products may be slightly limited. Approaching a mortgage broker will usually be helpful as they independent mortgage advisors have access to lenders on and off the high street, including specialist lenders. They are able to compare lenders from the whole of market and find you a deal best for your personal circumstances. They can use their experience and expertise to help you strengthen your application in order to increase your chances of being approved by a lender for a mortgage loan.
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