Mortgage With Pre-Settled Status: Everything You Need to Know

Regardless of whether you are a non-EU or EU citizen, getting a mortgage in the UK as a non-UK citizen is extremely tricky.

It can take a lengthy period of time to figure out all of the important factors at play, and while the Citizens Advice Bureau can definitely help in some instances, government departments are not always the quickest to respond and may leave you even more confused!

This article offers you all of the information you need to know about visa requirements, immigration status, residency status, and many other important factors that influence where you can get a mortgage in the UK.

Not sure if mortgage lenders will work with you as a non-European or a European national? Read on below.

EU Settlement Scheme Statistics

These figures are correct as off 29th January 2023.

As per the website the3million , the UK government established the EU Settlement Scheme to allow European Union citizens and their families to apply for settled or pre-settled status in the UK after Brexit. Here are some statistics related to the EU Settlement Scheme:

• As of December 2021, approximately 4.9 million applications had been made to the EU Settlement Scheme.
• Of these applications, approximately 4.3 million had been granted settled or pre-settled status.
• The highest number of applications were made by citizens of Romania, Poland, and Italy.
• Approximately 99% of applications were processed within the target processing time of 3 weeks.
• The Home Office reported that the overall approval rate for EU Settlement Scheme applications was 96%.

Please be aware that these statistics might have been updated, and the most recent information can be obtained from the UK government’s website or by contacting the citizen’s advice.

Success Stories of Pre Settled Status Mortgages

Understanding pre-settled and settled status

When you apply to the EU Settlement Scheme, you might expect to be asked to pick whether you want to apply for pre-settled or settled status. The status you are given is based entirely on how long you have lived in the UK. Here in this guide, we will discuss about the mortgage with pre settled status in the UK.

Settled status

Often you are offered settled status if you have lived somewhere in the UK for five years in a row. To get classed as someone who has lived in the UK for five years in a row, you must have spent no less than six months of the last 12 months in the country.

There are a couple of exceptions, such as if you have had to undertake military service abroad or another essential reason such as study, childbirth, or serious injury.

Pre-settled status

If you are yet to spend five continuous years living in the UK before you apply for a mortgage, you will likely be offered a pre-settled status.

But that isn’t always the case. To be classified as a pre-settled citizen and become eligible for a pre-settled status mortgage, you need to have started living within the UK by 31 December 2020.

The only exceptions to this rule are if you are applying as a family member of Swiss citizens, EU nationals, or EEA citizens who began living in the UK before the cut-off date.

If you are offered pre-settled status, make a note of the date you were awarded this status, as you are legally allowed to live in the UK for five years from that date.

Read about No UK Citizens Advice On Mortgages on our blog.

How to apply for settled or pre-settled status

If you have been living in the UK since before 31 December 2020, you need to provide proof of your residence and identity. For this, you will need:

• A valid passport
• A valid biometric residence permit
• A valid biometric residence card

If you landed in the UK on or before 31 December 2020, you could prove this by showing mortgage lenders your National Insurance number. Your NI number lets an automated check occur on your biometric residence based on things like benefit payments and tax records.

There are several ways you can apply for pre-settled status, such as via the post or online, so be sure to head to the gov.uk website to assess your options.

Why Having a Pre-Settled Status so Important

If applicants are not classed as UK residents, leading banks will only consider new applicants in a few rare instances. That is why ensuring you have a pre-settled status is so important before applying for a mortgage. Don’t forget, ex-pats applying for buy-to-let or residential mortgage applications must have evidence that they have a permanent right to live in the UK.

Some of the criteria that may be considered for an exemption include anyone who is an offshore worker or temporarily overseas, anyone planning to live in the property once it is completed, or anyone who is not going to be the full occupancy of the property.

One high-profile example of this was NatWest, who, as of 1 January 2021, stopped lending to any EU customers that had not received settlement status to live in the UK.

Its new policy is that anyone who came to the UK after 31 December 2020 and therefore no longer falls under the EU Settlement Scheme will need to apply for a visa and follow the new points-based system of immigration.

What is pre-settled status and how does it impact mortgage eligibility in the UK?

Pre-settled status refers to the immigration status granted to individuals who are not yet eligible for settled status under the UK’s EU Settlement Scheme. It allows European Union citizens and their family members who have lived in the UK for less than five years to continue living and working in the UK.

In terms of mortgage eligibility, pre-settled status does not have a direct impact on an individual’s ability to obtain a mortgage in the UK. The eligibility criteria for obtaining a mortgage are generally based on factors such as credit score, income, and property value rather than immigration status.

However, pre-settled status holders may face some additional challenges in securing a mortgage in the UK, such as having limited credit history and proof of income, as well as a potentially lower credit score due to their limited time living in the UK. These challenges can make it more difficult for pre-settled status holders to obtain a mortgage. However, it is still possible with the help of a knowledgeable mortgage advisor and through demonstrating a strong financial situation.

What challenges might pre-settled status holders face in obtaining a mortgage in the UK?

Pre-settled status holders may face several challenges when attempting to obtain a mortgage in the UK, including:

1. Limited credit history: Pre-settled status holders may have a limited credit history in the UK, making it more difficult to demonstrate their financial stability to lenders.
2. Proof of income: Pre-settled status holders may have difficulty providing proof of income, as they have only been living and working in the UK for a short period of time.
3. Lower credit score: As a result of limited credit history, pre-settled status holders may have a lower credit score, which can impact their mortgage eligibility.
4. Uncertainty about future immigration status: Pre-settled status is temporary, and holders may face uncertainty about their ability to remain in the UK long-term. This uncertainty can make lenders wary of providing a mortgage.
5. Language barriers: Pre-settled status holders may struggle with language barriers, making it more difficult to understand the mortgage application process and the terms and conditions of a loan.
6. Limited property options: Pre-settled status holders may have limited options when it comes to choosing a property to buy, as they may not be able to buy properties in certain areas or with certain features.

Despite these challenges, it is still possible for pre-settled status holders to obtain a mortgage in the UK by working with a specialist mortgage advisor and demonstrating a strong financial situation.

Frequently Asked Questions

Can I get a pre-settled mortgage?

Whether or not you can get a pre-settled mortgage will depend on several important factors. The most important factor is whether or not you have lived in the UK from earlier than 31 December 2020.

How long do mortgages with pre-settled status offers tend to last?

As with all remortgage and house purchase offers, the standard time frame tends to be 180 days before the offer is rescinded.

Rate switch offers tend to last for 45 days, and additional borrowing offers are normally valid for three months.

Can I get a UK mortgage as an ex-pat?

Whether or not you can get a UK mortgage as an ex-pat depends on several factors. For any buy-to-let or residential applications, many banks often require Swiss nationals, EEA, and EU citizens to offer evidence that they are allowed to reside in the UK before they can apply for new lending.

Evidence can include proof of settled or pre-settled status within the EU Settlement Scheme or other documents like indefinite leave to remain, indefinite leave to enter, or permanent residence.

Can I show my National insurance number to prove my stay duration in the UK?

Yes, you can also show your National Insurance number to prove your stay in the UK.

Can I get a mortgage with pre-settled status?

Yes, you can get a mortgage with pre-settled status, but you need to contact a mortgage broker before starting your mortgage application. You will also need to go through a credit rating check by the mortgage lender.

What are the requirements to get a mortgage in the UK if you’re a non-UK citizen?

The main requirement is that you must have been living in the UK for at least six months prior to applying. You may also need to provide proof of income and savings. If you don’t meet these requirements, then you won’t be able to get a loan.

You should also note that some lenders might want to see proof of a UK address. This means that even though you have already been living in the UK since January 1st, you still need to provide proof of a current UK address.

Do I need to pay tax in the UK?

No, you don’t need to pay tax in order to live in the UK. However, it is possible that you might be liable to pay tax in the future.

If you plan to move back to India after buying a home in the UK, then you will probably need to register for VAT. It is very likely that you will need to register for VAT in the UK if you intend to sell your property.

If you plan to move out of the UK permanently, then you will also need to register for VAT once you return to India.

Can I get a mortgage without indefinite leave to remain status?

Yes, you can get a mortgage without indefinite leave to remain in status. There are many ways to get a mortgage in the UK. You can apply for a personal loan, an unsecured loan, a secured loan, or even a business loan. Some lenders may require you to show proof of income, while others do not. The amount you can borrow depends on several factors such as your credit rating, your employment status, and the type of loan you’re applying for.

Mortgage With Pre-Settled Status: Summary and Key Takeaways

In conclusion, obtaining a mortgage with pre-settled status in the UK can present several challenges, including limited credit history, proof of income, and lower credit scores. However, with the help of a knowledgeable broker and by demonstrating a strong financial situation, it is still possible for pre-settled status holders to obtain a mortgage in the UK.

Hopefully, now you have a much better understanding of whether or not you can get a mortgage with pre-settled status. If you are weighing up purchasing a UK property with pre-settled status, our team of expert mortgage brokers can offer you a wealth of knowledge and expertise to help you along your journey.

Don’t forget to double-check all of the requirements listed in this article, and when you are ready to enquire further, be sure to get in touch with us. Our brokers are dedicated to helping you find the best mortgage deal for your specific needs and circumstances, and we would be more than happy to assist you in any way we can.