Published 27 August 2019 · Last reviewed 16 May 2022 · Older article — see current rates
What you need to know about getting a Mortgage as a refugee.
In this article, we look at buying a home as a refugee in the UK with particular reference of using a mortgage to finance the purchase. It is not aimed at asylum seekers but could still be read as a future goal.
According to the United Nations High Commission for Refugees (UNHCR) there are about 124,000 refugees in the UK, which makes us fairly accepting of this complex humanitarian issue. We are neither the most welcoming or the worse. However, if you are reading this no doubt you have experienced the difficulty of the entry system and now you are here homeownership with the use of a mortgage is another tough barrier to the outcome.
If your refugee status is recent and your deposit is small, see 5%-deposit visa mortgage options.
I am a professional Mortgage Broker and before I launch into your eligibility for a mortgage let me explain the dynamics of the mortgage market here in the UK which is quite different from the rest of Europe and the world.
Entrenched into our culture is the quest for owing your own home. So much so Mortgage Lenders have stepped into the high loan to value mortgage lending to meet with demand. Whilst most of the world sit at a minimum of twenty five percent deposit there are mortgages available with as little as five or ten percent for what the Mortgage Lenders see as the customers they want to attract.
In general Visa cases sit still with the twenty five percent requirement so in, essence, the same as other countries but at a distinct disadvantage to the indigenous population. This rule may be reversed, depending on the individual Mortgage Lenders policy if you are looking to make a joint mortgage application with someone who you plan to live with, who has permanent rights to reside – then in this instance ten percent deposit may be achievable.
Mortgages Lenders look at your earnings in relation to borrowing levels. As a guide it is typically 4 to 5 times your annual wage. If you are on a daily rate contract a typical formula would be 5 x daily rate x 46 weeks (allowing for a holiday period out of a full year). As a refugee it is likely you will have needed to be in the UK for 12 months before being permitted to work, and to compound the problem the Mortgage Lenders are likely to want at least 6 months UK employment track record and likely to be 12 months. The net result being your time in the UK will typically need to be 18 to 24 months before a mortgage is a possibility if you are buying on your own. Its even longer if you are self employed as two full years accounts will be required.
Where family members are gifting funds to support a refugee applicant, how gifted equity works explains lender requirements.
The other main consideration is the availability of documents to evidence your deposit if the funds derive from your originating country to satisfy international money laundering requirements. Guidance on this should be able to be provided on this matter by your professional Mortgage Broker should they be accustomed to the Visa mortgage market, such as Niche Advice.
If you already have a UK mortgage, remortgages still follow the same processes and requirements so switching rates will mean a small pool of Mortgage Lenders to go at so its vital to seek professional help as to not pay over the odds.
Lastly, Buy to lets are also open to refugees provided you have an existing UK property.