Along with other recent amendments for all borrower types, it is uncertain what the options for EU citizens living in the UK could look like further down the line.
So this week, Mortgage Solutions is asking: Have you come across any hurdles when trying to place mortgages for EU nationals living in the UK?
Having dealt with international clients for years, we’re well-versed in lenders’ views on non-UK nationals.
Whilst no hurdles have arisen per se, changes in lender criteria for EU nationals have required a change in adviser mindset to ensure we’re checking clients’ settled status in the same way as we would for non-EU nationals.
It’s less about ‘can you get a mortgage’ and more about whether you can secure the borrowing you want based on your residency status and the level of deposit you have available.
We have the government and lenders supporting high loan to value (LTV) lending to help get people onto the market, yet very few lenders will consider applicants without settled status or indefinite leave to remain, unless they have 25 per cent deposit.
This limits many EU nationals and other immigrants from getting onto the ladder.
EU clients, like all international clients living in the UK, are always nervous of the impact their residency status has on lending options. Being well-placed and experienced within the diverse London market has helped us at LDN to combat their fears and navigate lending options successfully.
No borrowers are rushing to complete in case of criteria changes, but in a year where lenders have rapidly amended policies and pulled products alongside tiered stamp duty relief, speed of transaction has been paramount – no matter whether you have settled or non-settled status.
It’s crucial for clients to have an experienced property finance team on their side to give them an advantage, as they can demystify the market and regulations, help to chase lenders and solicitors, and speak to BDMs where needed to ensure clients are well-informed, in control and secure.
A large part of my business is helping people living in the UK, who are both EU citizens and citizens outside of the EU.
The criteria changes have made it more difficult not just for me, but also brokers who dabble in the market. I’m getting more calls asking for my expertise. I am also turning more people away because it’s harder to get a mortgage for those who have been in the country a short time.
Now I ask initial qualifying questions to avoid spending hours doing a fact find only to say, ‘I’m sorry I can’t get you a mortgage’.
Some of the lenders we were certain would lend to EU nationals have changed their policy.
I spoke to one a few weeks before they made a change and was told nothing would happen. Obviously, there were plans in place that even the BDM didn’t know about.
Also, I think it’s beggar’s belief that some lenders won’t accept someone who’s living and working in the UK, is an EU citizen and has pre-settlement status.
I had a client who was an EU citizen and had been in the UK for over five years. He had his pre-settlement status and was living and working in the UK. He wanted to buy a flat with a sizeable deposit for residential purposes.
The lender said they just made a criteria change, so if he wanted to live in the property, they wouldn’t offer the mortgage. However, if he wanted to do it on a buy-to-let basis, they would.
I just thought, ‘that is nuts’, because buy-to-let is riskier. Also, it might encourage people to get a mortgage in a dishonest way.
I know mortgage brokers and lenders look at things from a different viewpoint, but I really would like it if lenders shared their viewpoint, so we understand why they make some decisions.
As long as we double check the criteria, we don’t have much trouble.
However, one thing that has changed is some lenders are treating EU nationals the same as foreign nationals coming from outside the EU.
Because of this, these lenders have made adjustments to their foreign national criteria which is both positive and negative because they have tried to standardise it.
Where it becomes negative is when it ends up putting foreign nationals at a disadvantage. Although they’ve tried to bring it all in line, it has been to the detriment of some of the foreign nationals outside of the EU.
This is mainly due to their visa standards, loan to value limits – so these changes are affecting all foreign nationals, not just EU citizens.
There hasn’t been any panic among borrowers because these kinds of clients tend to be quite well informed about their position when they come to us.
They seem to know their status, so we haven’t had to firefight as much around that.
They’ll tell us their situation, then we double check it against the lender criteria. As long as checks are done beforehand then there shouldn’t be too many problems.