Tier Two Visa Mortgages
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Tier Two Visa Mortgage (Part 1)
Tier 2 visa mortgages with Lee Gathercole and Neezam Romjon
What is a Tier 2 visa?
Anyone that is a non-UK and non-EU national that is looking to come to the UK to work and live will need to apply for a Tier 2 visa. This grants you residency status and gives you the rights to live and work in the UK. The Tier 2 visa is for those in a skilled role, and a list can be found on the home office website which determines the nature of the term ‘skilled’.
Why can it be a challenge to obtain a mortgage with a Tier 2 visa?
The challenge is typically because of the lack of time spent in the UK, as it can take time to develop a credit footprint. If you are new to the UK and have a new job, lenders tend to be a bit stricter.
How do I check or improve my credit rating if I am on a Tier 2 visa?
Anyone can check their credit score. There’s lots of different credit reference agencies, with the most popular being Equifax, Experian and TransUnion. You can go online and check your credit report. Try not to pay too much attention to your credit score, however, because when it comes to applying for a mortgage, lenders look at the overall risk based on their own risk profile, and apply their own scoring system.
In terms of how you can improve your credit score, there are lots of things you can do which will help, such as applying for a credit card and then using that credit card and paying it off in full every month to show yourself to be a responsible borrower. When you are eligible to vote, being registered on the UK electoral roll can help as well. Keeping up with payments and not applying for lots of different types of credit in a very short space of time is also important. The credit reference agency websites can also give some helpful insights into how you can improve your score.
How much can I borrow if I’m on a Tier 2 visa?
It’s the same across the board in terms of how much you can borrow. There are so many variables that will determine how much you can borrow and whether you’re on a Tier 2 visa or not really won’t make too much difference on its own.
You can typically borrow four to five times your household income, but it depends on how much deposit you’ve got, your employment type and the specific lender’s criteria. You could get a number of different responses in terms of how much you can borrow from different lenders
In our discovery call, which is the first appointment with us, we can give you a really good indication of how much you may be able to borrow on a Tier 2 visa, and based on the other factors mentioned.
Is there any specific mortgage advice for foreign nationals in terms of criteria?
Generally lenders will want to see that you’ve been in the UK for a certain period of time, so you will usually need to show at least three years, and as much as six years of UK address history. You can get a mortgage with a Tier 2 visa but as your options are more limited you need to take initial advice from a broker like ourselves.
There are lenders who will be a bit more flexible if you’ve got a bigger deposit, so if you don’t have permanent status or indefinite leave to remain in the UK, then some lenders will still lend to you if you’ve got a 25% deposit.
What if I have a Tier 1 or Tier 5 visa?
There are lenders that will want permanent residency, but a Tier 1 entrepreneurial visa is not seen as massively different to a Tier 2 visa. The lender will always assess the risk of you not being able to pay the mortgage and on a Tier 1 visa now would suggest that you’re probably more likely to be able to keep up with mortgage payments due to the specific nature of your job.
A Tier 5 visa is a temporary work visa and lenders are less likely to lend to people who are only residing in the country on a temporary basis, with temporary work rights, as they may be seen as a much higher risk, so it would be a lot more difficult to find a mortgage.
How can a mortgage broker help if you’re looking for a Tier 2 visa mortgage?
There are different ways to find the right lender but getting in touch with a broker so that we can get as much information as possible, is the best way of understanding which lender will be suitable for you.
If you do get declined, don’t assume that there’s one rule for all banks, because we’ve helped clients who have been declined by their main bank to get a mortgage offer, because we’ve got the experience. We’re based in a very diverse county and we see a lot of foreign nationals who haven’t yet got permanent rights to remain in the UK, so it’s an area we really specialise in.
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Tier Two Visa Mortgage (Part 2)
Can self-employed individuals get a mortgage on a tier two visa in the UK?
Yes, you could. If you’re self-employed, a limited company director or sole trader, and you’re on a skilled worker visa or a tier two visa in the UK, it is possible to get a mortgage.
We’ll dive into the ins and outs on how you do that as we go on.
Is it necessary to have a certain amount for a deposit when applying for a mortgage with a tier two visa?
Yes, and that is probably one of the biggest questions with tier two visa mortgages. The good news is you could obtain a mortgage with as little as 5% deposit, but there are many different requirements for that. It could be around your time in the UK, your salary, what you do for work, or how long you have left on your visa. There are many different variables to it.
It’s quite common for people to think you need a minimum of 25% deposit, but that isn’t necessarily the case. This is an area that we specialise in and some banks even offer 5% and 10% deposit mortgages.
What documents are required for a tier two visa mortgage application?
It’s not too different from what you’d expect for a British national applying for a mortgage. Lenders will still want to carry out the usual affordability checks and that you could evidence an income via payslips or tax returns.
They will look at that income on your bank statements and also what you spend on a monthly basis, to see if there are any financial commitments that also need to be factored in for affordability.
So you will need bank statements for the last three months, pay slips for the last three months, payslips for any bonuses you get, and sometimes P60s. If you’re self-employed, you need tax returns and sometimes company accounts.
Lenders will also carry out identity checks. That could take a bit more time compared with a British national. They might be able to just do an electronic ID check, but if you haven’t been in the UK long it might be more difficult.
Often, you’d be asked for your passport and driving licence if you’ve got one, and copies of any residency permits. That means visas and also what’s called a share code, which you could get from the UK government website. It verifies your residency and right to work in the UK.
The only other thing is that if your visa is due to expire soon and you’ve applied for an extension, sometimes they might ask to see the letter to the Home Office making that application.
How long does the tier two visa mortgage process take from application to approval?
Believe it or not, if you’re speaking to a mortgage broker who understands which lenders are suited to you, the application to approval time could be very normal – in line with someone who is applying for a mortgage without a visa.
What’s probably most important is how you plan ahead and find the right lender, but also having a broker to understand the documents required. As with a normal application, it could be anything from one week to four weeks.
Are there any restrictions on the type of property that can be purchased with a tier two visa?
The type of properties you could buy on a tier two visa are not really any different from those you could buy as a British national. As long as the mortgage lender you’re applying with is happy to secure your mortgage against the property, you should still qualify whether you’re on a visa or not.
Things that might catch you out are any non-standard construction properties – anything not built from brick or stone, that doesn’t have a tiled or slate roof, or with a timber or steel frame. Lenders may or may not lend on these non-standard homes.
Other things might be if you’re looking at flats or apartments or something above a commercial premises. If there’s a shop or a takeaway underneath the property, it could be a bit more limiting when you’re looking for a mortgage.
On a tier two visa, you’re limited with lending options already, so check the property is acceptable before you agree to buy it. If you’ve got an Agreement in Principle, make sure it would be valid on the property you’re buying.
Are there any additional costs to consider when applying for a tier two visa mortgage?
Not necessarily. But if you’re on a visa and buying a property, deposit could sometimes create an extra cost. If your deposit is coming from overseas, or it’s being gifted from a family member who might also be overseas, you may have further solicitor fees for additional checks.
But there’s nothing different in terms of costs in applying for a mortgage with or without a visa.
There are common misconceptions around mortgage rates, as well. People think they’re going to be penalised on interest rates because they’re on a visa. But the good news is that depending on how long you’ve been in the UK, your status and how long is left on your visa, you could qualify. Lots of high street banks will offer you normal interest rates.
What if I’ve been declined for a mortgage previously or I have bad credit? Can I still apply for a mortgage with a tier two visa?
If you’ve been declined for a mortgage previously I would try to understand from the bank or building society why you were declined. Was it credit score, affordability or something else?
It might just be that you didn’t meet their criteria or their appetite to lend. There are multiple reasons. As an advisor, once I know the reason we could see if it is insurmountable, or something that’s avoidable with another lender.
Bad credit is a really common reason to get declined for a mortgage, but it doesn’t mean you will never get one. It all depends on the situation. It could be that you’ve had one missed payment in the last three years on a credit card and no other problems. You could absolutely get a mortgage if that was the scenario.
But if you’ve got multiple missed payments or accounts that have defaulted quite recently because they’re in arrears, it will be really challenging to find a mortgage lender.
By understanding the details, usually from a credit report, and the circumstances that led to it, we could make a recommendation. Some lenders will listen if it was a life event where you lost a job or fell ill, rather than just shut the door on you. It is more difficult, but it’s not a definite no from every lender.
How does remortgaging work for those on a tier two visa?
In terms of the lenders available, it’s very much the same. It is still a little bit of a challenge until you’ve got a permanent residency.
If you’re looking for a new mortgage rate or you want to raise some funds for home improvements, the process is a lot smoother than when you’re buying a home – and a lot shorter.
To focus on the mortgage aspect, there are again many variables around your job, how long you’ve got left on your visa and your income. But there are quite a few options out there. It’s just about using someone who’s experienced to find the right mortgage for you.
Can I get a Buy to Let mortgage on a tier two visa?
Yes, it is possible to get a Buy to Let mortgage on a tier two visa. Similar to buying a property to live in, it is more challenging and more limiting. There are even fewer options to buy an investment property as a non-UK national without settled or indefinite leave status in the UK.
But it is possible and there are lenders out there. We’ve helped people get a Buy to Let mortgage without settled status. Some of the things lenders look at is credit scoring, deposit and whether you are already a property owner, as well as how long you’ve lived in the UK.
There are lenders out there, it’s just making sure you’re not wasting time with unsuitable ones – and an advisor like us will point you in the right direction.
What else do we need to know about getting a mortgage on a tier two visa?
We have a lot of people who call in feeling a bit deflated. They’ve either been to a bank or an advisor and been told they can’t get a mortgage. It could be because they haven’t got enough deposit or they haven’t been in the UK very long.
But don’t be downhearted. We’ve helped many people who have a 5% deposit or have only been in the UK six or 12 months. There are options out there.
There are other qualifying criteria, but someone like ourselves with experience in tier two visa mortgages could help. A lot of people are not necessarily misadvised, but have perhaps contacted people who lack a deep level of knowledge.
Don’t accept the first no as an answer. There are mortgages available with little deposit and little time in the UK – it something we could potentially help with.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
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