Foreign National Mortgages
Foreign National Mortgages – The Credit Score
Foreign National Mortgages – If you are a foreign national living and working in the United Kingdom on an Ancestry Visa or Tiered Visa, then it is important for you to know what is involved at each stage of the mortgage process when considering foreign national mortgages. One of those stages in the process may be the need to pass a credit score with the mortgage lender that we choose for you. Our concentration for this article is for a foreign national living and working in the UK under the privilege of a visa looking to buy a property in the UK to live in.
Whilst your chances of securing foreign national mortgages on a property rests on being successful as an applicant in several areas of your mortgage application, credit scoring is an area which needs to be addressed. Credit scoring is not just important in the application process but an area which needs special attention from your mortgage broker, especially if you are a foreign national in the UK on an ancestry visa or tiered visa. Whilst it can be argued that the credit score is outside of the mortgage advisers control, it is the duty of your mortgage broker to guide both you and your application towards success when considering foreign national mortgages. Therefore, it is absolutely essential that your broker has more than a good idea how credit scoring works in relation to visa mortgages so that the customer experience is more relevant, informative and successful.
Out of the handful of lenders that will accept mortgage applications from Foreign nationals living and working in the United Kingdom on an Ancestry Visa, some of the main lenders will credit score you as part of the process. This can involve the lender initially performing a credit search which is then automatically followed by a credit score. The aim of the credit search is so that the mortgage lender can assess the details of your online credit file and look at your creditworthiness. If the mortgage lender can see that your credit commitments have been paid on time and that there are no outstanding credit issues, the lender will start to score the application.
The lender will apply a score based on the lenders own internal scoring algorithm. The exact nature of the algorithm is not common knowledge even amongst its own staff but we do know that it is based on what type of client the bank is looking for as well as default statistics.
Now, before I continue I am aware that when you sign up with some credit reference agencies such as Experian, they will give you a score. It must be made clear that whilst this is helpful and can loosely be a guide, it is not directly connected to the scoring system used by the mortgage lender. It must also be noted that every mortgage lender scores differently.
The scoring system is very important not only because a decline can mean the end of the road for your application but also the level of deposit is often determined by the score achieved. As an example, if you want to put down 5% deposit your score must be higher than if you want to put down 10% for instance. A lower deposit means higher risk for the lender so your score must be higher to balance the risk that the lender takes on.
This is one of the challenges that Ancestry Visa holders and Tiered Visa holders have when it comes to getting a mortgage. We do not know for sure but it is reasonable to assume that because the applicant has not been in the UK for a very long period of time and does not have British citizenship then the score may already be a bit lower than desired. Mortgage Brokers need to make sure that the application is accurately keyed in for a start. Missing off a home phone number on the application could possibly make a difference. This is why mortgage brokers need to treat each application with care and help put odds in favour of the client by being thorough when it comes to foreign national mortgages.
As an example, if the self-employed have historically defaulted on mortgages more than employed people then the mortgage lender may give an employed person a higher score. If married people have proven to be more reliable when it comes to paying their mortgage than single people, then married people may get a higher score. Factors such as whether you are on the electoral roll (and yes you can go on it if you are on in the UK on an ancestry visa) can make a big difference. Additionally, have you got a home phone number? Having credit that you regularly pay off can all potentially affect your credit score in a good way.
Obviously the scoring system is not as simple as this but I wanted to give you an idea of how it works. The whole process can dig quite deep into target markets and default statistics.
As I take information from clients I am keeping an eye on the strengths of the case. I will offer an opinion but everything will be down to the lenders decision which is often computer based with an appeal facility should it be needed.
I do not want to paint a gloomy picture either. I processed a case recently whereby the clients had only 5% deposit to put down and despite the lender saying it probably won’t pass the score at that level, we tried anyway as that was the correct thing to do. On this occasion the clients were successful but I was aware of the downside and had a plan B in place which fortunately was not needed.
Getting a “Decision in Principle” is one of the first milestones in the mortgage process and it is rewarding if you get the result you need for your client.
Please read our page on Ancestry Visa Mortgages
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