Tier Two Visa Mortgage

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Tier Two Visa Mortgage

Podcast approved by The Openwork Partnership on 02/08/2023.

We explore Tier Two Visa mortgages with Manus Bonner-Tymms.

What is a Tier Two visa?

A Tier Two visa – or as it’s now known, a Skilled Worker visa – is essentially a visa that allows you to live and work in the UK. It usually applies if you’re working in a role that fits certain conditions and eligibility criteria.

There is a list of occupation types, minimum income and approved companies within the UK. The visa will have an expiry date, but it basically allows you to to live and work in the UK.

Why is it a challenge to obtain a mortgage with a Tier Two visa?

First of all, not all lenders will offer you a mortgage with a Tier Two or skilled worker visa. It’s mainly down to the temporary nature of the visa. Whilst they are renewable, and you might have a set job contract that lines up with your visa, you’re seen as slightly higher risk. You might, for example, only be approved for two years at the point of application.

Not all lenders will accept that. In terms of the ones that do, eligibility criteria varies. There might be a minimum deposit, minimum income or minimum time left in the UK. So it can be a bit of a minefield in terms of finding the right lender to offer you a mortgage.

How do I check or improve my credit if I am on a Tier Two visa?

We often see not poor credit, but lack of credit on a Tier Two visa – and that’s because of limited UK address history. If you’ve only been living in the UK for a year and you’re in a highly paid job at a financial institution, for example, you might not even have a credit card. It might just not be something you have needed.

Pair that up with the fact that you’ve only lived in the UK for a year, and British financial institutions just don’t have a footprint for you. So it’s not that you have bad credit – there is simply very limited information about you – and that can hold you back.

To improve it is tricky. One thing that will help is having a credit card or any kind of credit account that you’re managing well. Paying it off every month will build up that history of credit worthiness.

If you are using a company like Exprian to check your credit and you do have quite a good income, you can do what’s called an Experian Boost. You link your current accounts to your Experian account and that tells Experian that you have a steady income coming in.

It won’t boost it massively but it helps, especially if you are just below the threshold to obtain a mortgage.

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How much can I borrow on a Tier Two visa?

It’s not really a set amount. It’s down to Loan to Value (LTV) – the percentage of the property value that is taken up by a mortgage. A few lenders will let you put down a 10% deposit, which is 90% loan to value, but the majority prefer 75%, so you need a 25% deposit.

The only exception is currently Halifax, where if you’re earning over £100,000 a year they remove that limit so you can put down 10%. The vast majority will require 25%.

A lot of lenders will also require that deposit to come from yourself and not be gifted from family overseas.

Do you have any specific mortgage advice for foreign nationals?

Any broker you talk to should be fairly clued up on the criteria I’ve just been through, particularly if you’re based in a major city: London, Manchester, Leeds, anywhere like that.

We deal with a lot of skilled worker visas. One thing to add is if you’ve been on a skilled worker visa for a while and you’ve been in the UK for five years or more, you will potentially be eligible to apply for indefinite leave to remain.

As soon as you have indefinite leave to remain, that opens up a lot more doors from a lending point of view. It makes you a lot less risky as a customer so there will be a lot more options for you.

What else should I consider for a mortgage on a Tier Two visa?

While there are online calculators that might indicate how much you can borrow, see a broker before you go out and start viewing properties and making offers. Those calculators won’t take into account any of the criteria I’ve talked about.

Don’t risk getting your hopes up that you can borrow amount X based on your income. Sit down with a broker first, to get specific details. There’s nothing worse than putting an offer in and then finding you can’t get the mortgage to buy a place you have fallen in love with.

Your home may be repossessed if you do not keep up with your mortgage repayments.

Approved by The Openwork Partnership on 02/08/2023.