What is the current situation in the mortgage market in the UK? How Brexit has affected credit capacity of immigrants, including Poles? Here's what you need to know before getting a mortgage!
Following a number of enquiries from our readers regarding the current situation in the UK mortgage market, we have contacted Karol Wołosiak – Mortgage and Protection Adviser from Maxwell Mortgage Services. The company based in Folkestone, Kent, works with the UK's leading lenders and insurance providers, and with more than 50 years of collective experience prides itself on satisfying customers' individual needs.
Polish Express: Is it more challenging to get a mortgage in the current economic situation in the UK? If so, why?
Karol Wołosiak: Yes, it is more challenging to receive a mortgage offer. The availability of mortgages with less than 15% deposit is at a record low level. In a large number of cases, potential buyers are required to provide more of a deposit to purchase their new home. For many households their income has been reduced, their affordability adversely impacted, and it is much harder to find a property within a reduced budget. New borrowers can receive lower loans because lenders are using more strict criteria for the affordability calculations. The cost of many mortgage products has increased, which has an even more significant impact on reduced household incomes.
PE: What conditions must be met to apply for a residential mortgage:
KW: 1. Age – customer has to be at least 18 years old when applying for a mortgage; the maximum age is often a retirement age at the end of the mortgage term.
2. Affordability – we have to provide evidence of earnings and information about outgoings so the lender can decide on what size mortgage is sensible and affordable for you.
3. Credit history – lenders will ask for your consent to check your credit history, the better credit history (credit score), the higher chances, your mortgage application will be approved. You can check your credit score and history on various credit reference agencies online.
4. Deposit – you may have to provide evidence of your deposit to apply for a mortgage. The most popular sources are savings and gifts.
5. Property – before receiving a mortgage offer, every lender carries out a valuation for mortgage purposes to ensure it is suitable security for the loan.
PE: In the case of obtaining mortgage in the UK, have there been any changes since 1 January 2021? Are there any additional requirements for EU citizens?
KW: Yes, there are some changes for EU citizens. As part of the Brexit transition, EU citizens living in the UK before 31 December 2020 must apply to the EU Settlement Scheme to continue living in the UK after 30 June 2021. Those who apply will receive either ‘Settled’ or ‘Pre-Settled’ status. Every lender is different, but for example, NatWest will treat customers with ‘Pre-Settled’ status aligned to those with ‘Settled’ status. Lenders can ask for a ‘share code’ to verify your status.
PE: If I have a property in Poland, do I have to pay Stamp Duty Land Tax when buying a UK property?
KW: Yes, for those who own a property abroad and buy additional property in the UK, the additional property stamp duty charges will apply. The minimum you will have to pay is 3% of the purchase price.
PE: How do you help clients get a mortgage, what exactly is your support about?
KW: We provide financial advice tailored to our customer needs, considering short- and long-term goals, personal and financial situation. For some people, it can be incredibly confusing searching for the right mortgage, not knowing which deal is best and what bank will actually assist you, however, as a broker with over 70 lenders, we help find the best option and the right mortgage product for our customer needs. We take care of our customers insurance and protection to make sure if the worst happened, our clients stay with the home, not with the debt.
Getting a mortgage today is undoubtedly more difficult than it was a few years ago. But it's not impossible. So if you're thinking of buying a home in the UK and getting a mortgage, ask the experts what you can expect!
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE