A building society has launched a new mortgage deal designed for foreign nationals and expats returning from overseas.
Many people moving to the UK are shocked to learn they cannot get a mortgage on arrival, instead they have to overcome multiple hurdles put in place by lenders.
Most providers want foreign nationals to have been in the UK for at least two years and have built up a good credit file in the country, in order to demonstrate they can manage payments responsibly.
To combat these obstacles, Nottingham Building Society is offering a new mortgage deal where there is no minimum time of residency required in the UK.
There is also no minimum time remaining on a visa as borrowers are often required to have at least one year remaining on their documents. It will also require no minimum income and no UK credit history as it can access overseas credit files from 13 different countries.
The loan deposit on two, three and five-year fixed rates can be as little as 10 per cent if a credit file can be found or 25 per cent if not. The best rate is the five-year fix at 5.29 per cent. Overpayments of 10 per cent will be allowed each year.
The average two-year fixed mortgage rate is 5.93 per cent, according to Moneyfacts, while a five-year is 5.5 per cent.
Praven Subbramoney, the chief lending officer at Nottingham Building Society, said: “Many thousands of people come to the UK to work and indeed, we rely on skilled foreign workers in critical areas like healthcare and technology.
“But up until now many have been unable to obtain a mortgage within the first two years of being in the country because of restrictive and inflexible lending criteria. We want to change that.”
He experienced firsthand the difficulty of trying to obtain a mortgage in the UK.
“My family and I moved to the UK from our home country of South Africa in April 2023, when I took my current role. Once settled it was our plan to get a home of our own as quickly as possible.
“What I hadn’t expected was that the day you arrive in the UK, you start from scratch from a credit perspective. None of your history or experience elsewhere is taken into account. I’ve worked in financial services all my career, but this surprised me.”
Mr Subbramoney had to get a credit card to start building up his UK credit record and rented a property in the meantime.
Six months later, he began looking at properties to buy again. “It was concerning to see some of the rules that emerged. Most lenders wanted foreign nationals to have been in the UK for at least two years.
“For most lenders, the way to mitigate against less than two years is by accruing a very large deposit. This is typically in the range of 20 to 25 per cent, which for most people new to the UK would represent a serious challenge.”
Likewise, most lenders also expect foreign nationals to have at least two years remaining on a visa.
“If on a five-year visa, having been here for two years and needing to have two years left, you only have a one-year window when most lenders would consider giving you a mortgage. Which not only makes zero sense, it feels unfair. Why would a foreign national buy a house if they had no intention of staying?”
He added that it was difficult to prove the financial viability of him and his family. They were asked for proof of salaries, bank statements, history of funds, source of funds and employment contracts.
He said: “One year on, and the process is still ongoing. We have, thankfully, received approval for a mortgage, but we haven’t found the right home yet. That makes us one of the lucky ones though. Most foreign nationals coming here to work and put down roots wouldn’t have made that progress in a year.
“I know I’m in a relatively fortunate position. I know the world of finance better than the average person. For me to still not have my own UK home a year after I arrived illustrates just how big the need is for us to offer better solutions to foreign nationals who simply want to be able to call the UK ‘home’.”