Mortgage on a Tier 2 Visa

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Author: Elliott Culley - Director & Mortgage Adviser of Switch Mortgage Finance

Tier 2 Visa Mortgage

Getting a mortgage on a tier 2 visa can be difficult, but it is certainly possible to obtain a mortgage if you are in this scenario. Mortgage lenders in the UK often apply extra rules and restrictions on people buying a house with tier 2 visas and some lenders don’t lend at all. However there are many lenders available and with some you can even obtain a mortgage with a 5 or 10% deposit.

What is a tier 2 visa?

A tier 2 visa more commonly now known as a skilled worker visa allows you to come and stay in the UK to do an eligible job with an approved employer. Usually the tier 2 visa will be valid for 5 years, which at that point you can look to extend or apply to permanently reside.

Can a tier 2 visa holder buy property in the UK?

Yes as a tier 2 visa holder you can purchase property in the UK. Not all mortgage lenders will offer a mortgage to you. It will depend on how long you have lived in the UK and how much deposit you have. There are only a few mortgage lenders that will consider you so you need to ensure you approach the right lender first time around.

Can I get a mortgage on a tier 2 visa?

Yes it is certainly possible to get a mortgage on a tier 2 visa. You may have found that most mortgage lenders ask for large deposits, long period of validity left on your visa or want you to have lived in the UK for a certain amount of time. As a result it can seem like getting a mortgage on a tier 2 visa can be really difficult.

In reality, there are lenders offering mortgages to you even if you only have a 10% deposit. You will find many mortgage lenders available provided you have lived in the UK for the last 12 months, and there are lenders that will consider you even with less than 6 months left on your Visa.

Is it difficult to obtain a mortgage with a tier 2 visa?

When you first start looking it can seem like obtaining a mortgage is going to be really hard. In reality it can be easier than you might think to get a mortgage on a tier 2 visa. The biggest obstacles you may have come up against is the size of the deposit needed and how long you have left on your visa.

There are visa friendly lenders that will be able to help you get past these difficulties. You need to make sure you apply with the right lenders, this is where an experienced mortgage broker can help you.

Buying a house in the UK with a tier 2 visa

Many tier 2 visa holders think it is very difficult to buy a house in the UK. Although it can be more challenging, it is certainly easier than some people believe it to be. You need to apply with the right lender for your circumstances and there are a few lenders with flexible criteria to help tier 2 visa holders as much as possible.

Tier 2 visa mortgage deposit

The biggest challenge we come across for foreign nationals is the deposit. Lots of lenders will restrict you to needing a 25% deposit. However it is possible to obtain a mortgage on a tier 2 visa with just 5% deposit. To be eligible you will need to fit one of the following criteria:

5% Deposit Criteria

Qualifying with a 5% depsoit can be difficult if you are currently on a skilled worker visa. However it is possible and there is a total of three lenders that offer this currently.

Two of the lenders have income requirements that you must qualify for and they require you to have a good credit score as well.

However there is another lender who can offer this to you with no income requirements and you do not have to meet a credit score either. However you will need to have lived in the UK for at least 1 year.

We have helped many clients with Visas and from our experience it is very difficult to qualify for a 5% deposit if you have not been in the UK for more than a year.

10% Deposit Criteria

It is much easier to qualify for a tier 2 visa mortgage with a 10% deposit. You could even qualify for a tier 2 visa mortgage with less than 1 years UK residency.

You can qualify for better rates if you have a higher gross income or if you have a good credit score. There is one lender that has no income requirements and will not credit score, but their interest rates are higher as a result.

The longer you live in the UK the more lenders will become available to you. At 2 years you will have access to quite a few lenders, but it is certainly possible with less than 2 years and we have helped many clients in this situation.

Real Case Example

A client came to us for help after they had been turned down for a mortgage through HSBC. Our client was on a working tier 2 visa and had been in the UK for 18 months. They had a 10% deposit, but had been rejected by HSBC as HSBC required a larger deposit of 25%. We were able to secure the client a mortgage with a high street bank the same week, using a 10% deposit, and the client was able to proceed with the purchase of their first home in the UK.

Can I get a Mortgage on a Tier 2 Visa as a first time buyer?

Yes you can purchase a property as a first time buyer if you are on a tier 2 visa. We have helped many first time buyers accomplish their dreams on buying their first home with as little as 10% deposit and with less than a year in the UK.

Speak to an Expert!

Contact us today for expert advice and guidance on your unique mortgage and property needs. We will work with you on a one-on-one to basis to help you find the right solution for your needs.

With our experience you can rest assured that you are in good hands when it comes to securing the financing you need for your property.

Mortgage lenders for tier 2 visa holders

If you are on a tier 2 visa and you have less than 25% deposit, then the amount of lenders that can provide you with a mortgage reduces. There is only a handful of lenders that provide mortgages for VISA holders with less than 25%. We know who those lenders are and have built good relationships with them.

There are even some lenders who other mortgage brokers might not know about that can assist if the circumstances are suitable. We are renown for our expertise in this area and have even had mortgage lenders approach us to help improve their criteria for tier 2 VISA applicants.

Do I need a high credit score to get a tier 2 visa mortgage?

There is only 1 lender that does not credit score you as part of their application. All other tier 2 mortgage lenders check your credit score. It is brilliant news that we now have a lender that won’t credit score you as part of the mortgage application, as from experience, we know this to be one of the biggest barriers for tier 2 visa holders. However the rate for this lender is higher than others, so if you want a cheaper mortgage you want to make sure your credit score is good.

If you are borrowing a high percentage of the property, most lenders will want to see a high credit score and to see a history of responsible lending. Some tier 2 visa holders do not pass the credit score with the lenders, because their scores are too low. This can be because you have only just moved to the UK and therefore have little UK credit history. Or you have been in the UK but never taken out credit and therefore your score is low.

Below are some tips on how to grow your credit score as well as a link to Check My File, which I recommend as it gives you a access to the 3 credit agencies mortgage lenders will use.

How to improve your score.

What is my current credit score?

Can I get a mortgage with less than 3 years in UK?

Yes there are quite a few lenders that can consider your application if you have not lived in the UK for three years as a VISA holder even with a 5%-10% deposit.

To access the best rates You will need to have a strong credit score and some lenders have minimum income requirements too. There are lenders that can consider you with no minimum income and do not credit score, but the rates will be higher as a result.

Real Case Scenario

A client came to us having been in the UK for only 4 months. We were able to secure the client an accepted decision in principle within 2 days. The client eventually found a property and the mortgage was secured a couple of weeks later.

*The above scenario is possible if you have a 25% deposit or earn over £60,000.00 with at least a 10% deposit.

Why do most lenders want large deposits for foreign nationals?

A mortgage where an applicant is on a VISA and does not have indefinite right to remain carries more risk for a mortgage lender. The lender’s priority is ensuring that they can sell the property if you fail to keep up with the mortgage payment.

If you do not yet have indefinite leave to remain, there is a risk you may need to leave the UK in the future. If that’s the case it may become difficult for the partner on the mortgage to maintain payments on the mortgage or the lender to communicate with you.
Therefore lenders ask for higher deposit levels to compensate for and ensure you will not fall into negative equity if you had to sell.

How long do I need remaining on my Tier 2 visa to get a mortgage?

It is possible to obtain a mortgage with less than 3 months remaining on your tier 2 VISA. Some lenders ask for at least 2 years so you may need to avoid these lenders. If you have reapplied for an extension some lenders may ask to see this. The longer you have left the more options you will have.

How long do I need to have lived in the UK to get a tier 2 visa mortgage?

For most lenders you need to have lived in the UK for a minimum of a year. This is so you can build up enough credit history in the UK. I was able to secure a mortgage for one client who had less than 3 months in the UK, so it is possible to get a mortgage with with less than a year.

You may have found some lenders have asked you for a three year history of living in the UK. There are many that ask for less than this, offering competitive rates, but the longer you have lived in the UK the more options you will have.

How much can we borrow for a mortgage with a tier 2 visa?

Most mortgage lenders will use 4.49x your annual gross salary as a starting point. The total borrowing figure will reduce if you have credit commitments like a car loan or credit card. The figure could also reduce depending on how many children you have or adult dependents that may live with you.

Shared ownership on a tier 2 visa?

You can qualify for the shared ownership scheme if you are on a tier 2 visa. You will need at least 10% deposit to qualify and in most cases you must have lived in the UK for 1 year.

Shared ownership is when you purchase a share of the property’s total value. You will need to buy at least a 25% share of the total value of the property. You would then need to provide 10% of that share.

You will pay monthly mortgage payments for your 25% and the other 75% will be owned by the local housing association who will charge you rent for the 75% you do not own.

Shared Ownership Example

A property is worth £200,000. You are purchasing 25% of the property which is £50,000. You would need to provide a deposit of £5,000.

Are interest rates higher for tier 2 visa mortgages?

You will be offered the same interest rate as anybody else applying for the same product with the same lender. However you might be restricted on who you can apply to depending on your personal circumstances, so you might find the rate you can obtain might be higher than a UK national as you might be restricted to who you can apply too. Generally speaking it is possible to obtain the best interest rates on the market.

Does one of us need to be a UK citizen to get a mortgage?

If neither of you have indefinite leave to remain you can still get a mortgage, even with a small deposit. Please refer to the earlier criteria.

However if you can apply with someone who has indefinite leave to remain in the UK it increases the availability of lenders and makes a mortgage with a lower deposit much easier to obtain.

Indefinite leave to remain includes:
British citizen, OR

Has already been granted indefinite leave to remain, OR

Has EU settled status, OR

Has EU pre-settled status

What documents are needed to get a mortgage on a tier 2 visa?

The below is a list of the most common documents a lender may ask for, although further documentation could be required:

Proof of your income

Bank statements for the last 3 months

Proof of your deposit

Credit report

A copy of your visa, OR

A copy of your UK Immigration share code from this government service

Can I get a buy to let mortgage on a tier 2 visa?

Yes it is certainly possible to obtain a buy to let mortgage. Some mortgage lenders do have a minimum income of £25,000 per year that you will need to earn, but some require no minimum income at all.

If this is your first time being a landlord or you are first time buyer, then there are some lenders that will not consider you, and you will want to make sure you apply to the correct lender by using a mortgage broker.

Can I get a tier 2 visa mortgage with bad credit?

Yes, it is possible to get a mortgage with a tier 2 visa even with bad credit. It would completely depend on the severity of the bad credit. There are some specialist lenders that will consider you, however you will need it likely you will need to provide a larger deposit and resided in the country for longer.

If you are not sure on your credit situation and whether it could affect your mortgage chances, then we would advise to get in contact with us.

Why Choose Switch to Help You?

Whether purchasing or remortgaging, you’ll want access to the best products on the market. We have a proven track record of helping clients with tier 2 visas and will be able to assist you with your mortgage needs.