Purchasing a property with mortgage
The majority of people in the UK purchase property with a mortgage to cover some of the buying cost. British citizens and foreigners can get mortgages to buy a property in the UK, however, the process of applying for a home loan is a bit complicated
Purchasing with mortgage
If you are moving to the UK, there are two options either to buy or rent a home, each has its benefits and pitfalls. It comes down to personal preferences and circumstances, buying a house offers more stability and saves the renting costs.
Most people in the UK get a mortgage through banks or building societies to buy a house. Mortgage providers verify that the property is in ‘mortgageable condition’ and the aspiring property owner can meet any repayments.
Who can apply for a mortgage in the UK?
Fortunately, there are no restrictions on British nationals and foreigners to get a mortgage in the UK. Be it residents or non-residents, any adult can get the mortgage provided that they meet the following requirements
- Age – For people of an older age group, it is difficult to take out a mortgage as home loans are paid off over a long period. Most mortgage providers either refuse older applicants or demand a bigger initial deposit with a limited amount of time for mortgage repayment.
- Income – Mortgage lenders ensure that the payments will be met timely and calculate the risks. They will ask to provide proof of your occupation and earnings to analyze whether the applicant can pay back.
- Credit Score – The credit history of the applicants will be checked to assess their eligibility for a mortgage. Lenders may flat-out refuse to grant the mortgage in case of a bad credit score. Therefore, spend a few months boosting your credit score before applying for the mortgage.
Getting a mortgage as a foreigner
Foreigners can take out a mortgage to buy a property in the UK. The mortgage process is a bit complicated for non-residents and non-EU/EFTA nationals. Non-residents can get a non-status mortgage by paying a deposit of at least 25%.
Getting a mortgage is easier if you
- Have been residing in the UK for a minimum of two years
- Have a permanent job in the UK
- Have a bank account in the UK
How much can you borrow?
It depends on the lender and borrower’s circumstances. There are dozens of mortgage providers in the UK, some offer bigger loans than the others at the best rates. The UK mortgage lenders will consider the following three factors when offering a mortgage
- Total household income – As a general rule, the applicant can borrow up to 4.5 times their annual household income. Mortgage lenders will also consider outgoings, credit card scores, any outstanding debt, and day-to-day spending costs when making an offer.
- Value of the property – Loan-to-value mortgage ratios range from 50% (home movers, second mortgages) to 95% (first-time buyers). If the applicant makes a bigger initial deposit, chances are, they will get better rates. Additionally, a full valuation of the property will be carried out to verify the property is worth what you are paying.
- Lender’s estimate – The lender will consider your unique circumstances, cash inflow/outflow, and current available assets to make an appropriate offer.
Applying For a Mortgage
Apply for the mortgage directly from the bank or building society or seek assistance from an independent financial adviser or mortgage broker to compare different mortgages and shop for the best rates.
Gather the required documents and make an application, it will take around 18-40 days for the application to be processed.
