Buying a home in the UK is a major financial decision for anyone. It becomes tougher when one has to secure a mortgage. However, things truly turn more complex when it comes to non-UK citizens. Well, not to worry, mortgages for non-UK citizens are more common than you might think. Even mortgages for non-UK residents​ are prevalent if requirements are met.

Here’s how we can help you. We will break down the process, and discuss the challenges, and opportunities for those seeking mortgages for non-UK citizens.

The Key: Residency Status 

Non-UK residents or non-UK citizens can be put into three different groups. Whichever group you are in is the key determinant of your chances of getting a mortgage for non-UK residents or citizens, or what your strategy should be. Take a look at the different residency statuses.

1. Indefinite Leave to Remain (ILR): These are UK residents who aren’t citizens but have permanent residency. Objectively, it’s the easiest for this group to secure a mortgage. ILR residents are usually long-term residents so lenders treat them almost like a UK national. So, they can tap into competitive rates and a wider range of product options. 
2. On Visa: Non-permanent residents of the UK are usually on a visa such as a Tier 2 work visa or a family visa. Being on a visa does not disqualify your mortgage application but you may be considered a risky borrower and face restrictions. It is preferred that visas last at least two to three years, while the non-permanent resident has been living in the UK for a while.
3. Expats: If you are a citizen or a non-citizen living abroad, you can still purchase a property in the UK. Your options, however, narrow down significantly. Mortgages for non-UK residents often get approved with higher interest rates and more stringent deposit requirements.

The Challenges for Non-UK Citizens

• Limited Options: Some conventional UK lenders are reluctant to offer mortgages to non-UK citizens whereas some may give you a limited range of products. This means you may not be able to access the most competitive interest rates or mortgage features.
• Currency Risk: As fluctuations in exchange rates are common if you are earning in any other currency than the pound, that comes across as high risk. Therefore, you could face restrictions or even denial.
• Employment Stability: Proof of income is very important in any mortgage application but it holds even more importance in mortgages for non-UK residents or citizens. You need to include tax returns, payslips, or bank statements from your home country to prove employment stability in the UK.
• Credit History: If your personal credit is poor, lenders may reject your application. You need to make sure that you have credit built up in the UK even if you are a non-citizen. 
• Unfavourable terms: You may have to agree to a mortgage offer that has some more conditions than traditional mortgages. This could be larger deposits or higher interest rates. They can be shields for your lenders, and allow them to trust you more. 

Types of Mortgages for non-UK​ Citizens or residents

The main mortgage types include:

1. Residential Mortgages: If you wish to live in the property, this is the mortgage type you will be aiming for. Permanent residents can access the same range of residential products as UK citizens. Visa holders may get more limited options but with the help of a broker, they, too can get competitive residential mortgages for non-UK citizens.
2. Commercial Mortgage: This mortgage is for business people who are looking for a property for commercial usage or to rent out. They are usually stricter than residential ones, and the criteria for non-UK citizens may be intense to ensure that the person is in it for the long run. 
3. Expat mortgage: This is the most suitable mortgage designed for those who do not live in the UK but wish to purchase a property in the nation. It can be for investment properties, holiday homes, or residences for family members.

Documents Needed for Non-UK Citizen Mortgage Applications

To secure a mortgage for non-UK citizens, you’ll need to provide several documents that demonstrate your financial stability and legal right to reside in the UK.

Proof of Identity

Passport or national ID card.

Visa Documentation

Proof of your right to live and work in the UK, such as a visa or indefinite leave to remain status.

Proof of Income

As we said, recent payslips, tax returns, or other financial statements should be attached. If you’re self-employed, you may need to provide additional documentation, such as business accounts or contracts.

Credit History

A UK credit check will often be conducted, but if you’ve recently moved to the UK, you may also need to supply credit reports from your previous country.

Bank Statements

In order to understand your regular income and outgoings, lenders would seek six to twelve months’ worth of bank statements.

Proof of Deposit

If lenders understand that you have enough deposits saved up, it reassures them about your financial standing and management skills.  They also need to know the source, especially if it comes from abroad. 

FAQs on Mortgages for Non-UK Citizens

Do I need Indefinite Leave to Remain (ILR) to get a mortgage?

While an ILR boosts your chances by a lot, temporary visas also allow you to apply for a mortgage. The latter is considered more risky so you may face higher deposit requirements and a limited choice of products. The length of your visa, your employment status, and your financial situation can help you secure a mortgage for non-UK citizens despite not having an ILR.

Can I get a mortgage in the UK if I live abroad?

Yes, there are specific expat mortgages designed especially for people living outside the UK. They may not be readily available and fall under special circumstances. Therefore, contact a broker to help you find an appropriate deal of this type.

What deposit size do I need as a non-UK citizen?

A big deposit size isn’t mandatory for those with ILR or a longer visa but remember that a large deposit, around 25 to 40% value can tip the scales your way. It’s almost always a good idea to save up for a big deposit. 

Common Misconceptions

“All non-UK citizens face higher interest rates”

While higher interest rates are common for non-UK citizens, especially non-residents or expats, it’s not always the case. If you have a good profile and work with the right broker, you can qualify for competitive mortgage rates.

“Lenders don’t trust foreign income sources”

Earning income from outside the UK has currency risks. Other than that, if you have the right documentation, lenders will happily accept your foreign income, especially if you are working in a stable and reputable place. 

“Non-UK citizens cannot get a joint mortgage with a UK citizen”

Non-UK citizens can apply for a joint mortgage with a UK citizen, such as a spouse or partner. The application will be evaluated based on the combined financial situation of both applicants.

Conclusion

Securing a mortgage for non-UK citizens is more challenging than it is for residents and citizens. However, try to understand your residency status, collect and check all your financial documentation, and make sure they are all updated and accurate. Lastly, contact a broker to explore all your options. 

If you are ready to take the next step, get in touch with UK Mortgage Finder for expert consultation. Our team can help you secure a mortgage for non-UK residents or citizens that meets your financial needs without any obstacles, and make your homeownership dream a reality.