Tier Two Visa Mortgage
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Tier Two Visa Mortgage
Lewis Posner answers some frequently asked questions about mortgages for people on a tier two visa.
What is a tier two visa mortgage?
There’s no specific tier two visa mortgage – it’s a standard mortgage, but what often happens is that lenders put restrictions on visa requirements. Depending on whether or not you’re a Uk citizen or if you’ve got residency in the UK, each lender looks at things a little bit differently.
Tier two visa mortgage enquiries are quite common. It’s typically a sponsored work visa so it’s something that comes up quite a lot.
How does someone qualify for a Tier Two Visa mortgage in the UK?
If you’re applying for a mortgage, the bank is always going to want to know your country of residence and your status in the UK. Plenty of lenders will accept you on a tier two visa, but it will depend on the time left on the visa and how long you’ve been in the UK.
The biggest restriction typically tends to be around Loan to Value. Quite often, the high street lenders will say that you need a 25% deposit if you’re holding a tier two visa.
What documents are required for a tier two visa mortgage application?
It’s the standard documentation that you’d expect for a mortgage, plus a focus on the visa itself. You will need your passport and a copy of the visa for the lender to review.
It will then come down to the usual things – evidence of your income with payslips or tax returns, bank statements and a credit report.
As with all things, preparation is key. The more organised you can be with your paperwork, typically the smoother the process.
Can self-employed individuals on a tier two visa get a mortgage in the UK?
Absolutely, although it’s unlikely that you’ll be self-employed on a tier two. It is typically a longer term sponsored visa, where you work with an employer and you’ve got a working relationship or desirable skill that secured that visa in the first place. So I wouldn’t say we see many self-employed tier two applicants.
Is it necessary to have a certain amount for a deposit when applying for a tier two visa mortgage?
That tends to be the biggest barrier to entry. Most banks across the board will accept you on a tier two visa, but they usually have a requirement for a larger deposit or, as they will phrase it, a maximum Loan to Value.
They typically want a 25% deposit, so your maximum loan to value – the amount you can borrow in relation to the property price – is 75%. A couple of lenders will let you apply on a standard mortgage basis, potentially opening up lower deposit options at 10% and 15%.
That’s only available with a select few and they will typically require other things. The big question is length of time in the UK. If you’ve been in the UK for more than five years, a few lenders are okay with that. One or two are also OK with more than three years, but others will all cap you at 75% loan to value, so you need a 25% deposit.
What is the minimum and maximum amount one can borrow on a tier two visa mortgage?
That minimum and maximum is based around the Loan to Value – not necessarily the amount that you can technically borrow. You might be able to borrow more money based on your income, but they’re still going to cap you as a percentage of what the property is worth.
You can reach a point where it doesn’t matter how much income you’ve got or your affordability. You’ll be restricted by the size of your deposit, as a percentage of the overall property price.
How long does the tier two visa mortgage process take from application to approval?
It does vary and a lot of it comes down to the bank and how busy they are at that time. It’s not a longer process, necessarily, on a tier two application. It’s typically going to be the same timeline as any other mortgage.
A lot of that is subject to how busy the bank is. It also links back into being prepared, with getting all that documentation ready to go. Quite often, you can just upload that all at once, rather than continuously go back and forth.
Are there any restrictions on the type of property that could be purchased with a tier two visa mortgage?
No, the main restriction is obviously on that Loan to Value. The property type is usually fine – it won’t be restricted specifically for a tier two visa.
Every bank is very different, however. So although you might have one lender on the high street that has certain criteria, another one might have completely different rules. It’s not not a one-size-fits-all situation.
Some banks may have restrictions around the property, and that’s not specific to a tier two visa. But if you’re limited on lender options because of your visa status, and that lender doesn’t accept that property type for whatever reason, it can be more challenging. You don’t have the full range of banks that would otherwise be available.
What interest rates and fees are associated with a tier two visa mortgage?
There’s no change in the interest rate – you’re not penalised because you’re on a tier two visa. It’s simply a case of finding the right lender for the job. With banks in general, the larger deposit that you put down, the better the interest rate.
So actually, if you are going through this with a 25% deposit, you may end up with a preferential rate compared to someone putting down a 10% deposit.
Are there any additional costs to consider with a tier two visa mortgage?
No, there are no additional costs. We always want to look at the lender that’s going to be the most suitable for you, to get the best possible outcome.
Sometimes, for whatever reason, there’s a restriction and we have to move to the next bank on the list. If that continues and we move further down the list, sometimes costs can start to rise – because we’re no longer going for the best value deals at the top. But none of those costs are specifically being charged because you’re on a tier two visa.
What else do we need to know about a tier two visa mortgage?
The two biggest things that will help you are to be organised, and ideally, to have been in the UK for a certain length of time.
If you’re able to get a credit score, that tends to be a really helpful factor. Banks often limit the amount of time you’ve been in the UK as a criteria, because typically if you’ve been here less than three years it can be quite hard to get a good credit footprint on you.
If you’ve only maybe been in the country for, let’s say, 18 months, and you’re on a relatively new tier two visa, on a credit search not a huge amount comes up about you. Banks like to be able to find information about you as a potential customer.
So it helps if you make sure all your credit is in order and you’re keeping an eye on that. If you’re doing all the right things regarding credit score then it can become easier for a specific lender to see that you exist here and will be a reliable borrower.
Your home may be repossessed if you do not keep up with your mortgage repayments.
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Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.