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Deposit Requirements for Mortgage Applicants With EU-Pre-Settle Status

Deposit Requirements for Mortgage Applicants With EU-Pre-Settle Status
Mark Langshaw

Author: Mark Langshaw - Content Manager

Updated: June 28, 2022

Britain’s decision to leave the European Union was always going to have an effect on mortgage lending, for better or for worse, and one borrowing demographic that was bound to feel its impact is EU foreign nationals who are in the market for a UK property.

Most mortgage lenders have updated their criteria for these customers now Brexit is taking shape, and the good news is that there are still lending options out there for people from the European Union, European Economic Area (EEA) and Switzerland, including those with pre-settled status; but how much deposit will you need under these circumstances?

LTV ratios for pre-settled applicants from the EU

We’ve heard of lenders asking EU mortgage applicants with pre-settled status for higher mortgage deposits, including one case where the customer was granted an agreement in principle based on 10% deposit, only to be asked for a minimum of 25% on full application.

While it’s true that Brexit has made some lenders view foreign nationals from the EU as higher risk – which often means lower loan-to-value (LTV) ratios – it isn’t necessarily the applicant’s pre-settled status that might drive up the deposit requirements.

Many EU nationals end up applying for a mortgage with little or no UK employment history, and this can limit the amount of approachable lenders, and therefore the mortgage deals they qualify for, forcing them to settle for high deposit mortgages and hefty rates.

This doesn’t have to be the case, though, since there are mortgage lenders who are applying no LTV restrictions on customers with pre-settled status. This basically means that they will be asked for the same amount of deposit as a UK national, assuming there are no other risk factors involved in the agreement, such as a history of bad credit.

What to do if a mortgage lender rejects you because of your pre-settled status

If you’ve been turned down for a mortgage or asked for a massive deposit because you have pre-settled status, keep in mind that there might be another mortgage lender out there who would be willing to approve you for a better deal with a higher LTV.

Most mortgage lenders are now considering EU applicants under their existing criteria for those without permanent right to reside and their in-house visa requirements.

As long as EU applicants with pre-settled status can provide a government website share code to evidence their residency status, there’s no reason why they can’t apply for a mortgage with no LTV restrictions, provided they find the right lender too.

Just make sure you seek professional advice before you apply if you’ve already been rejected once. Too many mortgage applications in a short space of time can look bad on your credit report, so timing is everything when planning a second shot at approval.

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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