Maybe you want a place to live in yourself or you are looking to purchase an investment property. Whatever your reasons, you need to understand the type of mortgages available in the UK, and the steps needed to get one set up.
Mortgages in the UK: What types of mortgages are available?
The choice of different mortgage products in the UK can be overwhelming, so you need to know a bit about how each of them works and what makes each of them different.
The first thing you should consider is whether you want a fixed rate, or variable rate product. Fixed rate mortgages will guarantee the same interest rate will be applied for the duration of the agreement – typically two to five years.
Variable rate mortgages, however, can cost more, or less depending on how the interest rates change. They might be based on the Standard Variable Rate (SVR) your lender decides on, or the Bank of England (BoE) rates. Some products match the SVR or BoE rates exactly, some are slightly higher than these rates, but track them as they move up and down, and some offer a discount on these rates - typically only for a short period.
There are also different products which are available only to buyers in specific situations. First time buyers, or those purchasing a second home for buy-to-let, for example might be entitled to different offers than other buyers. It is a good idea to get some specialist advice from a qualified, specialist mortgage broker, who can explain the options available to you as well as the application process for mortgages for foreign nationals.
Should I go to a lender directly or use a broker?
If you are unsure what type of product is best for you, or how your application may differ from a UK national’s taking expert advice from a qualified mortgage broker is a good idea.
Mortgage brokers are obliged to work in your interests and explain in detail why they recommend a specific product for you. If you speak directly to a lender and you are unsure what you want from your loan, you might take on a mortgage which works out to be a poor fit to your needs. Although lenders must check that any product they offer you is affordable for you, they don’t have to make any further recommendations beyond this. This can result in a costly error if you are not confident and clued up about the UK mortgage market.
What are the legal requirements to get a mortgage in the UK as a foreign national?
Foreign nationals, resident or not, can legally buy property in the UK, although individual lenders will set their own terms. You might find that you are offered different products, conditions, or interest rates, as a foreign investor.
How can I get a mortgage in the UK as a foreign national?
Getting a mortgage in the UK is relatively straight forward, although subject to a number of checks to ensure that you can afford the loan. Availability of finance depends on your circumstances, but because the UK mortgage industry is highly competitive, it is worth talking to a mortgage broker to see what deals they can offer you- brokers often get exclusive products that are not readily available direct from the lender.
The exact paperwork you will need will depend on the lender. However, you can expect to be asked for the following:
Copies of your personal identification documents (passport). Proof of legal residence in the UK. Documents to prove you are creditworthy. Documents to prove the affordability of the mortgage.
These documents should be provided to your mortgage broker to get a decision in principle, which means that the lender agrees how much they will lend you if you find a suitable property. Once you have an offer accepted on a home, you will have to hand over more paperwork, such as a property valuation and survey to prove it is priced fairly.
Liquid Expat provides professional advice on mortgages for foreign nationals and expats. They can help your source investment properties in the UK as well as finding the mortgage that suits you.