Meet your next customer
They’re in their late 30s. They work in healthcare, their partner works in tech. They have established careers, regular incomes and a young family, maybe a child the same age as yours. Their next ambition is to own their own home. Sounds pretty standard wouldn’t you say?
The problem is, there’s one thing that can make that ambition considerably more complicated: their nationality.
Despite having similar financial circumstances and aspirations to other prospective buyers, foreign national applicants can face additional lending restrictions, from minimum income thresholds to visa requirements and lower loan to value limits.
At Hodge, foreign national customers are assessed under our standard lending criteria. This means brokers can bring us cases without them being placed into a separate lending category. We’ll look at their individual circumstances as a whole to understand how we can support their borrowing.
The demand is here, but are the lenders?
And the wider market suggests this too. L&G data shows searches relating to foreign nationals increased 17% in the past six months between May and October.
Our own broker research reflects a similar picture. 44% of brokers we asked expect to see further growth in this area, while 37% are already seeing it.
But, at the same time, 73% say they find foreign national mortgage cases hard to place. It just doesn’t quite add up, does it?
If you live or work in the UK, it’s clear to see foreign nationals are an established part of the workforce and communities. From healthcare professionals, engineers to people working in technology, finance and hospitality, they’re contributing across the economy and putting down roots. So why is the mortgage market making it difficult for some of them to do just that?
The challenge our research found is foreign nationals have traditionally been placed outside of standard lending criteria, viewed as higher risk or short-term. 61% of brokers say there are too few lenders offering foreign national mortgages, 57% believe LTV limits are too restrictive and 44% say the same about visa requirement.
The reality is, life changes. Our lifestyles, careers, milestones, where we live and the communities around us are all moving forward at an unprecedented pace. Sometimes lending criteria doesn’t get there as quickly as it should.
Why we don’t believe in barriers for foreign nationals
At Hodge, we questioned whether these additional restrictions were always necessary. A shorter UK employment history or particular visa status doesn’t automatically tell us whether someone can afford a mortgage or if they represent a greater lending risk.
We wanted to take a more individual approach like we do with all our customers. So, we changed our lending criteria to assess foreign national applicants under our standard lending policy, rather than applying additional hurdles simply because of their nationality.
Brokers now can now bring eligible foreign national cases to Hodge with greater flexibility. We offer up to 95% LTV with a loan of up to £750,000. There’s no minimum income requirement and we only require 12 months’ employment history. In addition, we don’t have minimum time required on visas and accept Tier 1 and Tier 2 visa (and other types will be considered). And the cherry on top, no LTI cap where singles or joints income exceeds £40,000.
This isn’t about lowering lending standards or increasing risk. It’s assessing affordability as we always do, using our expertise and individual underwriting approach to look at the whole application, rather than allow suitable borrowers to be ruled out before their circumstances have been properly considered.
Expertise in practice
Maya and Tushir had been living in the UK for three years and were ready to buy their first home on the South Coast. Both were in the UK on visas rather than having permanent rights to reside. Maya held a Skilled Worker Visa and Tushir a Dependant Visa. Tushir had also been working for the NHS for almost three years but was paid weekly, while the couple’s 5% deposit was being gifted by family in India.
After taking a holistic view of the applicants’ circumstance, we were able to support a £484,000 mortgage at 95% LTV. It’s a good illustration of why looking at the whole story really matters.
If you have a case, we’re here to talk it through
55% of brokers say case-by-case underwriting is the most important thing when placing specialist cases.
At Hodge, brokers can talk through a foreign national case with their BDM before submitting an application. If there’s more to understand, an underwriter can get involved too.
As one broker put it, Hodge is always “looking for ways to make a case work rather than reasons to decline”.