Can foreign nationals get contractor mortgages in the UK?
Last Updated: 10-12-2021
Reading Time: 11 minutes
We had something of an epiphany, which came about like this…
…We were working on ways to solve UK contractors’ problems of getting mortgages on the High Street. In doing so, we realised that immigrant workers had a similar problem, only twofold:
- lenders didn’t know how to deal with them as a contractor;
- advisors showed similar ignorance when dealing with them as a non-UK citizen.
The logic we applied to typical contractors' problems we applied to those of an immigrant.
It meant abandoning trying to reason with in-branch and call centre staff.
That's because they're restricted to their own set lending models. Nine times out of ten, they tailor those algorithms to permanent, salaried employees.
We know the limits of their inflexible systems. In our experience, mortgages for immigrants fall outside their boundaries.
No matter. We've faced this problem many times working with independent professionals. Now, we only go to people with the power to make decisions: the underwriters.
Problem-solving for specialist mortgages: it's what we do
And guess what? Our philosophy works! We can get immigrants mortgages just as we do for limited company contractors.
Our process is simple. We've identified and established working relationships with foreigner-friendly mortgage lenders. We then apply their criteria to your situation. No messing about; we work with these lenders daily.
The result is this. We can now arrange mortgages for non-EEA foreigners working in the UK on Tier 1 and 2 VISAs.
Since resolving the issues, we’ve helped many foreign nationals buy their first UK property. Country of origin is far less important than you think. It's the way you operate your business and your payment structure that's key here.
So if you’re in the UK on an HSMP or Tier 1 or 2 VISA, we can often help.
What problems do immigrants face at High Street mortgage lenders?
Many of our ‘immigrant-friendly’ lenders are recognisable High Street names. Needless to say, this can and does confuse our foreign clients.
How can we help when the client has failed going to a lender direct?
The reason's simple. Your local branch often struggles to take your payment structure into account. They want security. They want longevity.
If you have less than 12 months remaining on your contract (who doesn’t?), they will penalise you.
Understanding the traditional UK mortgage model
Most lenders also use simplistic methods to work out relevant earnings for lending purposes. In mortgage terms, how they calculate your ‘affordability’ is basic in the extreme.
In reality, it caters for those in full-time employment, not contractors.
Recent times of austerity have exaggerated this scenario. Some lenders still implement Responsible Lending Guidelines to the letter, too.
It's tough, but we know why they do it. This means you can earn more than an employee doing the same job, but you're less likely to get a mortgage.
That's because your net income will show low take-home pay. Your accountant makes sure it does to maximise tax reliefs available to you.
But an in-branch advisor won't understand that.
Their lending model uses net take home as the basis of their affordability calculations. They're just not trained to deal with dividends and low salary.
Presented with your ‘facts’, lenders will demand at least two or three years’ accounts.
When you’ve been in the UK for only a short while, such documentation is impossible for you to produce. As such, your application is ‘rejected’ or marked 'high risk' before it’s had a fair hearing.
Why specialist mortgage brokers are different to the High Street
Unlike banks or building societies, a specialist mortgage broker is just that: a specialist. Rather than try to secure mortgages for everyone, they focus on specific market sectors.
In our case, we've built relationships with contractor-, self-employed- and immigrant-friendly lenders. That means we know what we need from you and know which lender best suits your circumstances.
Make no mistake: finding a suitable lender is not only a matter of saving time.
Imagine you visit every lender on the High Street and they all run a credit search. Each time you fail, you’ll leave a ‘footprint’ on your credit file.
The more you search and fail, the worse it becomes. But most contractors don't know this until it's too late.
This is less of a problem if you have a long and established credit history. But most foreign nationals, by virtue of their circumstances, do not.
Failed searches can have a grave impact on your ability to secure any type of finance in the future. But of far more importance is the actual matching of you with your perfect lender.
And that's where your greatest benefit lies: in a broker who knows how to get a mortgage for immigrants in the UK.
Use a broker who knows the market and the market knows them
Every day, we speak to lenders who have a direct impact on our business. We are aware of their mortgage products, interest rates, deposits and fees.
Building relationships like this has put us and you in a strong position. They allow us to offer you an immigrant mortgage using a generous multiple of your daily rate.
We’re an independent mortgage broker, not tied to any one bank or building society. We know all the lenders in the UK who offer genuine contractor mortgages. In many instances, we've been integral in the lender opening their doors to contractors.
This gives us access to the whole of market, so rates available to us can fluctuate from lender to lender. We even have exclusive deals you won't find elsewhere, so strong are our relationships.
We invite you to leverage that strength. It even enables us to get a mortgage for new immigrants, as well as those more established.
Benefits of using a specialist and common pitfalls to look out for
Our team of specialist advisors has secured special terms for foreign nationals. That means they can get mortgages for contractors on an immigrant visa. That's foreign nationals here as an HSMP contractor and those on Tier 1/2 visas.
These terms give immigrants access to mortgages with lower deposits, as little as 10%. Plus, it uses your contract rate to determine affordability, not accounts.
And these bespoke lending criteria get even better!
As there's so little documentation, the whole process is much quicker than on the High Street. During the pandemic, lead-times have gone out slightly. But, in usual circumstances, we often secure mortgages within days of an applicant’s first contract.
A proven track record is essential for securing mortgage finance
It’s our policy to only work with High Street lenders with proven results. This means that they’re dependable and trustworthy enough to process mortgages that actually complete.
Why is this so important to mention?
There’s a large number of mortgage lenders falling over themselves to lend you money. Or so they say!
It’s all too easy to go online or into a bank branch and secure an “Agreement in Principle”. This is not the same as a mortgage offer. So, please: beware.
Many lenders will offer you an A.I.P. within hours. But when the application goes to the underwriter for approval, they reject it.
The lender will back track and the advisor will call you with the bad news. They’ll say they’re no longer comfortable with either your HSMP or contractor status. Or both!
We know this to be true as we've dealt with many immigrant contractors in just this situation.
If you reach this stage, your house purchase will be in real jeopardy. It could even leave you out of pocket. If you’ve arranged the searches needed to complete the mortgage paper trail, you may not get a refund.
How much can I borrow based on my contract rate?
Now you know that you can get a mortgage, you want to know how much you can borrow. As a guide to what you can borrow using your contract rate, you can visit our mortgage calculator.
There’s no need to talk to anyone immediately, if that’s what you’d prefer. If you’d like us to call you at a more convenient time, fill in our ‘Request a Callback’ form. You'll find the form next to this guide in the sidebar.
But you may be closer to buying a home than that. What if you've seen a house and what to put an offer in?
Well, let's get you in there! We're more than happy to give you a specific quote.
Your mortgage enquiry in total confidence, in expert hands
You can talk to us in 100% confidence about your needs and circumstances. We cannot issue an agreement in principle without talking to you first.
When you call, our experienced advisors can match you to a lender and a mortgage. That's before they run any unnecessary credit checks that could leave those nasty footprints.
Once we gather the relevant information, we’ll email you our recommendations. We can then discuss your options in more detail.
If you then want to proceed, awesome. We’ll assign you a personal, dedicated advisor from within our office.
They're trained to handle the immigrant contractor mortgage process with diligence and within guidelines. They'll look after you from application right through to completion.
This ensures that your mortgage completes without incident and on time. You’ll struggle to find a guarantee like that on the High Street, no matter what your nationality!
John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.
Posted by John Yerou
on April 6th, 2010 00:46am in