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Obtaining a mortgage in the UK as a foreign national

Foreign nationals living in the UK are keen to own their own home, and of course this is more than possible and in most cases a mortgage will be required. This article highlights the processes and factors involved that will maximise the chance of obtaining a mortgage.

Written on 24 August 2021

Many non-British expats who are living in the UK are keen to own their own home, and of course this is more than possible. However, understanding the process of obtaining a UK mortgage, and having a clear idea of what will be required of you is essential.

Below is a breakdown of how this process works, what you will need to provide, and any obstacles that may arise, in order to help you prepare.

Requirements for your UK mortgage

When it comes to mortgages, there are some requirements that do not differ no matter where you are from. These are basics such as:

  • Holding a UK bank account
  • Holding a permanent source of income

Some requirements that will also be applicable to non-British people can be:

  • A larger deposit which may increase depending on which lender is used (typically more than 20%)
  • To have lived within the UK for a minimum of 3 years

It is important to have permanently lived within the UK for 3 years or more to enable the lender to see consistent income, amongst other important information.

This process will be found to be easier if you are able to provide the following:

  • A good and traceable credit history – it is a good idea to sign up with a credit rating agency to establish your credit rating and get advice about how you can improve your credit rating
  • Proof of being a UK resident for a minimum of 2 years

Types of mortgages within the UK

There are two main types of mortgage in the UK, and which type you use is up to the individual and their personal preference. The majority of all lenders will offer mortgage agreements up to 25-32 years (which will vary depending on the applicants age and other variables).

A fixed-rate mortgage allow the interest rate to stay fixed for a period of either two or five years. After the chosen fixed period, the interest rate typically changes to whatever that particular lenders standard variable rate is (unless the client holding the mortgage finds and enters into another fixed term).

The lenders standard variable rate tends to commonly be much more expensive than the fixed-rate term.

This choice of mortgage within the UK holds the majority with around 75%.

You also have variable-rate mortgages. This method means that no interest rate will be fixed and consistent, meaning that the amount you pay will fluctuate depending on the general interest rate.

This type of mortgage of course carries a higher risk factor, but can then become beneficial if interest rates are to take a sudden drop.

Other documentation required for UK mortgages

UK lenders will also require a hefty amount of paperwork documentation in order to approve a mortgage application.

It is always wise to start preparing what is needed as early as possible, to avoid any delays or problems getting hold of them, as these issues can ultimately delay the mortgage application process drastically.

Some of the necessary documents will include:

  • Passport or another form of photo identification
  • UK utility bills
  • A P60 form from your employer (annual UK tax summary) or between 2-3 years of verified accounts if self-employed)
  • Payslips dating back three months
  • Between 3-6 month of bank statements
  • Proof of any insurance benefits or pension income
  • Tax returns

If you are a UK resident, you will also need to provide proof of your residency status.

What else should I expect from the mortgage process?

The average time scale of your mortgage application can take between 3 and 6 weeks, however it can also take longer depending on other variables such as missing documentation, complex applications and contact/communications issues due to work schedules.

In regards to lenders, there are definitely some more expat-friendly ones than others.

Seeking advice from a professional UK mortgage advisor can help you find the best, most suitable lender based on your needs as an individual.

Mortgage costs in the UK

Unfortunately, as well as the interest payments on your agreed mortgage type, other fees are also mandatory within the mortgage process within the UK. It is important to be aware of the types of fee’s you will be looking at, mainly to avoid any shocks mid-property purchase.

Some of these will include:

  • Survey fees (for any and all surveys carried out on the property)
  • Transfer fees (a fee that pays your lender to transfer the mortgage monies directly to your solicitor)
  • Valuation fee (a fee that pays for the mortgage lender to carry out the necessary survey to value the property)
  • Arrangement fee (a charge from the mortgage lender for setting up the mortgage)
  • Booking fee (similar to a reservation fee, an amount that is charged upfront for booking your mortgage which is usually non-refundable)
  • Solicitor fees (separate or fixed fee, which is usually a percentage of the mortgage price, paid to your solicitor)
  • Higher lending charge fee (roughly 1.5% of the mortgage price. If a smaller deposit is paid on the property purchase, this fee will cover the mortgage lenders insurance in the event that you cannot pay back the mortgage as agreed/ have to sell on the property at a loss

If you decide to use a mortgage broker to help you navigate the process, a fee will also be payable to them.

Benefits of using a mortgage broker

While the mortgage process can be relatively straightforward, providing you meet all the basic requirements set by the lender, mortgage brokers can provide an essential service if you are a foreign national or have circumstances which make your application more complex (eg. You are a US citizen, you are self-employed or you are retired).

To get a wider range of options, a specialist mortgage broker would provide you with a far greater chance of not only securing a mortgage, but also securing a mortgage at a more reasonable rate.

Never assume that the only products that are available are shown on a lender’s website as brokers will have access to unique products and will therefore be able to provide you with opportunities you wouldn’t be able to find if you approach lenders directly.

The mortgage broker will also be able to walk you through the process and ensure that all of your application is in order, maximising your chances of being approved.

Request a free introduction to a UK mortgage advisor

If you live in the UK and need to secure a mortgage for a UK property, we can help you find the best mortgage through our panel of specialist UK mortgage advisors.

Simply complete our introduction forms to give us a better understanding of your circumstances and the help you need. We will then use this information to connect you to the most suitable UK mortgage advisor in our network.

Our introductions are a personalised, high-quality service that connects people to our panel of trusted experts, each qualified to provide tailored advice and guidance.

Once connected, the mortgage advisor will be able to assist you in finding the perfect mortgage to match your situation, as well as answer any questions you may have that have not already been answered above.

Request a free introduction to an independent mortgage advisor that will:

  • Conduct a free introductory consultation to understand more about your situation and offer immediate guidance of your options
  • Ask you to complete fact-find questionnaires to establish your best options and provide advice on how to proceed
  • Provide access to mortgages in over 150 countries including France, UK, United States, Italy, Germany and Spain.