In a significant shift towards tighter immigration control, the UK government has introduced a series of measures aimed at reducing legal migration numbers by approximately 300,000. These changes, which took effect on 5 April 2024, impact various aspects of the immigration system, including the Skilled Worker visa, the Shortage Occupation List, dependant visas, and the Graduate visa route.
If you are a foreign national living and working in the UK with a tier 2 visa, sometimes known as a skilled worker visa, you may be wondering if you are able to take out a mortgage. 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 will explore this topic in more detail and answer the question: Can I get a mortgage with a tier 2 visa?, what are the new rules around tier 2 visa mortgages, and what lenders can you approach?
Can I get a tier 2 visa mortgage?
Yes, even under the new immigration rules, the mortgage rules remain the same for those on a tier 2 visa. The new rules do not affect the way in which lenders assess and approve applications from someone with a tier 2 visa, and they will still use the same affordability criteria. If you are interested, you can always contact our team of expert mortgage brokers to help you with mortgage applications.
What are the new rules around tier 2 visa mortgages?
On December 4, 2023, the UK government announced a series of significant changes to its immigration rules aimed at reducing net migration to the UK by around 300,000 over the next three years. These changes include:
Increased minimum salary threshold
The minimum salary threshold for Skilled Worker visas will be increased to £38,700 per annum from the current £26,200. This is a significant increase and will make it more difficult for businesses to sponsor overseas workers.
Changes to the Shortage Occupation List
The Shortage Occupation List will be replaced with a new Immigration Salary List. This list will retain a general threshold discount but will no longer allow for a 20% going-rate salary discount for shortage occupations. This is a further tightening of the rules and will make it more difficult for businesses to sponsor overseas workers in these roles.
Adjustments to dependant visas
The number of dependantsAny individuals who depend on the borrower for financial sup... that can be sponsored on a Skilled Worker visa will be reduced from two to one. This will have a significant impact on families who wish to move to the UK.
Review of the Graduate visa route
The Graduate visa route will be reviewed to ensure that it is only used by graduates who are genuinely seeking to work in the UK. This may involve making it more difficult for graduates to switch to other immigration routes after completing their studies.
The combined effect of the changes
The combined effect of these changes is likely to reduce the number of non-EU citizens coming to the UK to work. This will be welcomed by some businesses, who have raised concerns about the availability of skilled labour. However, it will also have a negative impact on families and businesses that depend on immigration.
How to get a mortgage with a tier 2 or skilled visa?
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 employers. 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 concerns 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 equityThe difference between the value of the property and the amo... in the property. In the unfortunate event that they have defaulted 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.
What lenders can you approach for tier 2 visa mortgages?
For those holding a Tier 2 visa and seeking to purchase a property in the UK, a variety of lenders extend their services, including:
- Santander: They accept tier 2 mortgage applications, provided the property is for the applicant’s sole use.
- NatWest: Their maximum loan-to-value (LTV) ratio is 75%. However, for those seeking a mortgage on a spouse visa – where one applicant has a permanent right to stay – the LTV can increase to 95%.
- Halifax: Applicants without the permanent right to stay in the UK must fulfil one of the following criteria to be considered: have lived in the UK for at least five years, seek an LTV of less than 75%, or earn more than £100,000 per year.
- Barclays: They offer a higher LTV limit than the average for visa mortgages, up to 90%.
Please note that individual lender’s criteria may differ, and they will typically assess your mortgage application based on standard credit and affordability checks associated with property purchases. They will also consider factors such as your length of UK residencyThe borrower's residency status, such as whether they are a ... and the remaining duration of your current visa. It’s highly recommended to seek independent financial advice prior to submitting a mortgage application to ensure you’re making an informed decision and maximising your chances of success.
Please note that individual lender’s criteria may differ, and they will typically assess your mortgage application based on standard credit and affordability checks associated with property purchases. They will also consider factors such as your length of UK residency and the remaining duration of your current visa. It’s highly recommended to seek independent financial advice prior to submitting a mortgage application to ensure you’re making an informed decision and maximising your chances of success.
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 visas to have lived and worked in the UK for a minimum of 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 creditworthiness and how reliable of a borrower they may be. Any CCJs, defaultsMissed payments on credit accounts, which can affect a borro... 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.
Can a Tier 2 visa holder get a mortgage in the UK?
Yes, Tier 2 visa holders can apply for a mortgage in the UK, but eligibility criteria may vary among mortgage lenders.
Can you buy property in the UK on a Tier 2 visa?
Yes, it is possible to purchase property in the UK while holding a Tier 2 visa, but eligibility and mortgage options may vary among lenders.
What is the minimum deposit required for a mortgage?
The minimum deposit required for a mortgage can vary but typically starts at 5% of the property’s purchase price. A larger deposit may offer better mortgage terms.
What is a mortgage payment?
A mortgage payment is a regular amount of money paid by the borrower to the mortgage lender to repay the loan, typically consisting of both principal and interest.
What is a credit report?
A credit report is a detailed record of an individual’s credit history, including credit accounts, payment history, and other financial information, used by lenders to assess creditworthiness.
What is a mortgage repayment?
A mortgage repayment refers to the process of paying back the loan amount borrowed for purchasing a property. It includes both the principal and interest portions.
What is a credit card?
A credit card is a financial tool that allows individuals to make purchases on credit, with the obligation to repay the borrowed amount to the card issuer.
What are personal circumstances in the context of a mortgage application?
Personal circumstances refer to an individual’s financial situation, including income, expenses, employment status, and other factors that impact their ability to secure a mortgage.
What is a mortgage broker?
A mortgage broker is a professional who helps individuals find and secure mortgage loans by connecting them with suitable lenders and assisting with the application process.
What is a mortgage applicant?
A mortgage applicant is an individual who applies for a mortgage loan to purchase a property. The applicant’s financial and personal information is assessed by lenders.
Can I get a mortgage in the UK if you are on a visa?
Yes, it is possible to secure a mortgage in the UK while on a visa, including a Tier 2 visa. However, lenders may have specific criteria for visa holders.
What is a mortgage loan?
A mortgage loan is a type of loan used to purchase real estate, with the property serving as collateral for the loan.
What is a credit reference agency?
A credit reference agency is a company that collects and maintains credit information on individuals and businesses, which lenders use to assess creditworthiness.
What is property valuation?
Property valuation is the process of determining the estimated market value of a property, often conducted by professional appraisers.