Tier Two Visa Mortgage

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Tier Two Visa Mortgage

Julian Nicolls explains how mortgages work for people on a tier two visa.

What is a tier two visa and how do I qualify for a mortgage with a tier two visa in the UK?

A tier two visa was the terminology that’s been used for quite some time, and people do still refer to these visas – but it’s now actually known as a skilled worker visa. It’s given to people who come to the UK to work in a particular role with a specific employer.

They may well have been sponsored by that employer to work in that skilled occupation. Qualifying for a mortgage will come down to a few things, including how long you have been in the UK for and how long you were in the previous country.

You may need to prove where you were before and what you were doing. Lenders want to understand your story. It might be that you were doing a similar role in another country and you’ve moved to the UK for work. You might have relocated to the UK with the same firm – it depends on the circumstances of the applicant.

Sometimes a minimum time in the UK is required. Some lenders will want you to have been here for a minimum of 12 months and most lenders will require a minimum deposit of 25% of the property value.

They’ll also want to understand how long you have left on that tier two or skilled worker visa. Some will want to see that you’ve got at least 12 months. There is some variance in the criteria across different lenders, but that’s the typical minimum.

Can self-employed individuals get a mortgage on a tier two visa in the UK?

Yes, but if someone is self-employed they will have to have been here for a minimum of two years because lenders typically want to see a two year earnings history. That means two years of tax returns and business accounts for that self-employment.

Some lenders will accept just one year’s self-employed accounts but they will want to understand what your earnings were and what your occupation was in the UK prior to that.

It’s down to the individual applicant’s circumstances and whether they have two years of self-employed accounts. You could typically borrow up to 75% of the value of the property.

Is it necessary to have a certain amount for a deposit when applying for a mortgage with a tier two visa?
Yes, a 25% deposit is typical.

What are the minimum and maximum amounts one can borrow on a mortgage with a tier two visa?

As with any mortgage, it’s dependent on your income. The lender will have to be happy that any income being used to support the mortgage is sustainable.

So if someone has a combination of employed and self-employed income, where the self-employed income has only been for a year, that could affect how they could borrow. But generally speaking it’s the same as any other mortgage application in terms of the affordability calculations.

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What documents are required for a tier two visa mortgage application?

It’s the usual proof of income, so payslips and bank statements if you’re employed, tax returns and bank statements for the self-employed.

We also need your passport to confirm your nationality, and usually proof of the previous address outside of the UK, from a bank statement, for example.

Previously, people will have been issued with residence permit photo cards but these are no longer used. The government has now switched to an online system for people to prove their right to work in the UK. If someone has settled or pre-settled status as an EU citizen, for example, they could prove that by getting a share code from their online account. That could then be issued to mortgage brokers and lenders.

The same applies for people on a skilled worker visa. By sharing a code you could be checked online – it’s a really good, foolproof way of verifying someone’s status. It’s more secure than a photocard.

How long does the tier two visa mortgage process take from application to approval?

It’s not necessarily longer than a standard mortgage. If we could submit an application to the lender with all the required documents on day one, which we would always do, we’re giving that lender every opportunity to give you the decision you want.

We don’t want to submit an application for a lender and then they come back to ask for extra information or documents. I would typically speak to the lender in advance of doing an application to understand exactly what nuances there might be or extra requirements.

We make sure that we anticipate any stones in the road to get things through as quickly as possible.

Are there any restrictions on the type of property that can be purchased with a tier two visa?
No, it’s the same as for anybody else. There are the usual considerations if you’re buying a leasehold flat, where you need to be aware of the ground rent, the lease arrangements and any service charges. But that’s no different to anybody else buying a flat.

What are the interest rates and fees associated with getting a mortgage on a tier two visa?

Some lenders will have a specific range of rates for applicants on a tier two visa, while others will offer their usual range of rates. If it’s a lender offering a separate specialist mortgage rate, that potentially will be higher than normal. The arrangement fee may also be higher.

But for any client who sat down in front of me I would assess the circumstances and source the cheapest mortgage for them. It’s not necessarily going to be a more expensive mortgage. With most lenders it’s just the normal rates.

Are there any additional costs that need to be considered when applying for a mortgage on a tier two visa?

Not really, but there are some related costs that I will always discuss with clients in these circumstances. For example, someone on a skilled worker visa may well have the intention to apply for the next stage of settlement.

They might want to apply for British citizenship in the future and, of course, there are quite substantial costs involved with that. I would talk to people about how they would pay for that in the future. Will they continue to save after buying this property?

Also, quite often people bring deposit monies from abroad to help with their purchase, in which case there are extra checks from solicitors. They charge for those checks, which essentially make sure that the money you’re using is your own. It’s not specific to the lender or type of mortgage, it’s incidental for someone in that circumstance. There might be extra things that they’re going to need to pay for.

What if I have bad credit? Can I still apply for a mortgage with a tier two visa?

Yes, but I would immediately be wondering how they have already got bad credit here. What are the circumstances? It’s often that mistakes have been made or direct debits have been taken on the wrong day – that sort of thing.

It could be possible to get a mortgage if you have bad credit but it is a case of understanding the severity and the circumstances. A mortgage advisor will often have a conversation with a lender to determine if that is going to be an issue.

How does remortgaging work for those on a tier two visa?

There are no differences from a standard remortgage. Perhaps someone has an issue or a peculiarity in their circumstances when they apply to buy a house. If they’re then looking to remortgage to a better deal after a couple of years, they will have moved on in their lives. The issue may no longer be a challenge, making it easier to remortgage.

The criteria for remortgaging on a tier two skilled worker visa aren’t really any different from when you’re purchasing.

Can I get a Buy to Let mortgage on a tier two visa?

Yes, it is possible, but typically applicants will need to have been in the UK for longer, and have longer left on the visa.

With a Buy to Let mortgage, the lender is typically more concerned about what the rent is going to be and whether it will cover the mortgage payment. They also check that your income in the background will cover your own living expenses. But the actual earned income is less of an issue at that point.

How can a mortgage broker help with a mortgage on a tier two visa?

Don’t think you can’t do it. Speak to a mortgage broker and we’ll go through your options. We’ll assess your circumstances and confirm if there are any issues, and how important they are.

Sometimes we do have to say to a client that they can’t get a mortgage now, but once they have done certain things, it may be possible. It might be a good idea to save a little bit more for your costs, for example.

Everybody’s circumstances are different. I’ve sat down with people plenty of times where they’ve been told by someone that they can’t do it – but actually there’s no issue. We just explain what it’s all about.

We always do a fact-find to explore a client’s circumstances, and that helps you fill in any gaps in your own knowledge too, so you understand what’s available. It’s always good to have a chat with a mortgage broker to find out what’s possible.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.

The information contained within was correct at the time of publication but is subject to change. Podcast recorded on [DATE].