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Getting A Mortgage in The UK

June 29, 2022
2022-06-29
When you want to buy a new property in the UK, know that it's going to be expensive. Especially if it's a place in a big city like London, Machester, and the like. Do you have enough money for it? It's understandable if you don't. You'll need to be as rich as Jeff Bezos to buy a home in this country without any financial assistance. But don't worry! At least you can still get a mortgage in the UK. The process is easier than you think! All you need is to get your finances in check, prepare the documents and prepare your required documents in order to get it.

Getting A Mortgage in The UK


Can Foreigners Get a Mortgage in The UK?

Non-residents are allowed to buy real estate in the United Kingdom. Ergo, they're also permitted to take out a mortgage loan here, right? Yes, they can. If you're a foreigner looking to buy a new home in this country, you can get a mortgage even without becoming a resident. With that said, however, it is easier to get it if you live in the UK. The financial institution is more likely to lend you the loan if you relocate to London, Manchester, Nottingham, or any other part of the country. Becoming a legal resident means you'll stay in the country long enough to repay your mortgage.


The Main Factors Lenders Will Consider

When you approach a British bank or any other financial institution, know that they will consider a lot of things before they decide to lend you a mortgage loan. Firstly, you need to have a local bank account—that's an undisputed requirement! Next, they'll look at your age—will you live long enough to repay your mortgage in full? If you're older, you're less likely to get that loan. They'll also look at your source of funds. Do you have a job that pays you regular income? Can you save enough to pay back the mortgage loan? And finally, there's your credit score. If you have a bad credit score, you can kiss your chances of getting that mortgage loan goodbye!

Getting A Mortgage in The UK



How Much Can You Borrow?

If you're wondering how much you can borrow for your mortgage in the UK, do note that lenders will consider three important factors to determine the amount. The first is your total household income—how much you and the other people in the house earn in total. In principle, lenders are willing to lend 4.5 to 5 times the total household income for your mortgage loan. The second is the value of the property, which they'll get through a property valuation. And the third is how much they think you can afford. This is where they check your source of funds, credit score, and the like.


Different Types of Mortgages in The UK

According to Expatica, there are many different types of mortgage loans to choose from in the UK. There's the fixed-rate mortgage which, true to its name, comes at fixed-rate interests in a period of around 2 to 5 years. A variable-rate mortgage, on the other hand, can fluctuate depending on the general interest rate. Then there's the capped-rate mortgage, wherein the rate can't rise above a certain amount. And if you want to link your mortgage to your savings account, you can go for an offset mortgage loan. This, in turn, can lower your monthly payments or shorten your repayment term.

Getting A Mortgage in The UK



The UK's Mortgage Rates

Now, let's talk about your possible mortgage rates. Here in the UK, your mortgage rate depends on how long it will take for you to repay the loan. For a two-year fixed rate, it's 1.68%. For three years, it's 2%. And if your mortgage in the UK has a five-year fixed rate, it's 2.0%. While if it's a ten-year fixed rate, it'll be 2.58. As of this writing, the country isn't offering 100% mortgage loans yet.


Prepare Your Documents

As with any other arduous task, getting a mortgage in the Uk requires you to show many important documents. They will include your valid ID (your passport will do), your last three monthly payslips, bank statements from the last three to six months, tax returns (from last year and the previous year), and proof of address (utility bills, lease contract, etc.). Now, if you're a working resident of the UK, you'll also need to show proof of your residency status and an accomplished P60 form from your British employer. And if applicable, proof of UK pension or insurance benefits too!


Can You Refinance Your Mortgage Here?

Can you refinance your mortgage by taking out another mortgage loan in the UK? The answer is yes, you can! But do take note that this doesn't give you a second mortgage that you then have to pay alongside your already-existing loan. The purpose of refinancing your mortgage with another is to shorten your payment period and lower your interest rate. the objective is to help repay the existing loan, not make you lose more money in the process! And you can do that with the same lender or a different one.

Getting A Mortgage in The UK


As you might expect, buying a new property in the UK will cost a lot of money. So in order to help with your finances, why not take out a mortgage loan? Don't worry! The process may be intimidating but it's not that impossible to do.




Destinations

PROPERTY LISTING

Bath, United Kingdom
464 £ / night    
8 bedrooms3 bathrooms16-16
Cambridge, United Kingdom
311 £ / night    
2 bedrooms1 bathroom4-6
Cambridge, United Kingdom
243 £ / night    
3 bedrooms1 bathroom6-6
Oxford, United Kingdom
308 £ / night    
4 bedrooms2 bathrooms8-8


Cambridge, United Kingdom
311 £ / night    
6 bedrooms2 bathrooms10-11
Cambridge, United Kingdom
474 £ / night    
6 bedrooms3 bathrooms12-14
Oxford, United Kingdom
569 £ / night    
5 bedrooms3 bathrooms10-10
Oxford, United Kingdom
292 £ / night    
2 bedrooms1 bathroom4-4
Bath, United Kingdom
329 £ / night    
6 bedrooms5 bathrooms12-13
London, United Kingdom
541 £ / night    
3 bedrooms2 bathrooms6-8