This is a question many travelers and expats have when moving to the United Kingdom. The quick answer is yes, foreigners, non citizens, and expats can indeed apply for a mortgage or home loan in the UK. The home loan market in the UK is quite well adapted to foreigners and expats, but knowing what you’re looking for and what you’re going to get requires a bit of knowledge. We’ll break down the various types of home loans and conditions available for foreigners in the UK.
Not All Options Will Be Available
The first thing to consider is that not every option will be available to a foreigner or non citizen. There are plenty of options out there, just don’t expect the exact same terms and conditions as a native. Additionally, like in your country of origin, some options are only available in particular situations, for particular properties or under certain conditions. Once you understand what the different rules are by area, you can begin to consider your available options.
Variable or Fixed Rate Mortgages
This is an important consideration for any home buyer regardless of the location. Variable rates often start lower but can end up higher than a fixed rate mortgage. There are a number of economic factors that go into determining that rate. Some buyers may prefer the stability of a fixed rate mortgage over the longer term due to the flexibility of variable rates in the event of a spike.
A home buyer should also consider for how long the mortgage will be. This can determine the amount of interest paid based on the fixed or variable rate. There are many repayment options which can make purchasing a home more affordable for a foreigner purchasing in the UK.
Bank or Mortgage Broker
This can be a difficult decision for home buyers looking in the UK. While it is certainly possible to apply for and get a mortgage through your local bank, the market can be quite intimidating. Not knowing exactly what you are signing on for can leave you in quite a predicament. The reason for this is because banks are not obliged to offer any consultation about a property beyond whether or not the buyer can afford it. This can lead a potential buyer to be placed into a situation that is more than they can reasonably handle.
A broker in most cases, will work for the best interests of the home buyer, taking into account a variety of factors to ensure that the home buyer is capable of managing the expenses of the new home. The broker will also be able to explain any additional considerations the home buyer may have such as applicable taxes, property rights, utilities and other expenses.
Stipulations and Documentation
Getting a mortgage in the UK is fairly straightforward even for an expat or foreigner, with consideration to the fact that your rates may be slightly higher as a foreigner. Otherwise, many of the same standards found in the United States and elsewhere apply. You must provide proper identification, proof of income, a credit check of some sort, and proof of affordability of the home. These things and the documentation required will vary by the bank used. There are a number of fees that are required to complete a sale in the UK. These include:
- Mortgage Booking Fee 250 euro
- Brokerage Fee 500 euro
- Arrangement Fee Up To 2000 euro
- Valuation Fee Up To 1500 euro
Once you have all documentation and have paid the appropriate fees, the process is essentially the same as the United States.