Deposit Requirements for EU Pre-Settled Status Mortgages

Britain’s decision to leave the European Union was always going to affect mortgage lending, for better or for worse, and one borrowing demographic that was bound to feel its impact was EU nationals looking to purchase property in the UK.

Most mortgage lenders have updated their criteria for these customers now that Brexit has taken shape. The good news is that there are still lending options 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

Some lenders have asked EU mortgage applicants with pre-settled status for higher deposits. For example, in one case, a customer was granted an agreement in principle based on a 10% deposit, only to be asked for a minimum of 25% during the full application process.

While Brexit has led some lenders to view EU nationals as higher risk—often resulting in lower loan-to-value (LTV) ratios—it’s not necessarily the applicant’s pre-settled status that drives up deposit requirements.

Many EU nationals apply for a mortgage with little or no UK employment history, which can limit the number of lenders they can approach and the mortgage deals they qualify for. This often forces them to settle for high-deposit mortgages with higher rates.

However, this doesn’t have to be the case. Some mortgage lenders apply no LTV restrictions for customers with pre-settled status. This means they may be asked for the same deposit as a UK national, provided there are no other risk factors, such as a history of bad credit.

Deposit source

Most lenders will look upon this favourably if your deposit is primarily based in a UK account. However, if your deposit is from non-UK bank accounts, you will likely need to provide details and documents to your lender to prove your deposit.

This will also be the case if you have a gifted deposit from relatives overseas for example.

A few of the documents you’ll need to provide are below:

• Recent bank statements (typically 3–6 months) from your non-UK bank account. The statements should show the current balance, account holder’s name, and transaction history.
• If the funds are savings: Evidence of how the funds were accumulated (e.g., pay slips, tax returns, or other proof of income).
• If the funds are from a gift: A signed and notarized gift letter from the person providing the gift, stating that the funds are non-repayable.
• If the funds are from property sale: Documentation of the property sale, such as a sale agreement or deed of transfer.
• If the deposit is in a foreign currency, lenders may ask for confirmation of the GBP equivalent and recent exchange rates.
• Some lenders may require additional verification documents from your non-UK bank or third-party evidence confirming the legitimacy of the funds
• Official translations of any documents not in English may be required.

The above is a rough guide to what you’ll be expected to provide. The exact documents you’ll need will vary from lender to lender.

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 larger deposit due to your pre-settled status, keep in mind that another mortgage lender might be willing to offer you a better deal with a higher LTV.

Many mortgage lenders now consider EU applicants under their existing criteria for individuals without permanent right to reside, though exact requirements can vary between lenders.

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.

Be sure to seek professional advice before applying again if you’ve already been rejected once. Too many mortgage applications in a short period can negatively impact your credit report, so timing is crucial when planning your second attempt at approval.

Some lenders might want to see certain levels of income before they approve this type of mortgage, be it joint or household income. Speaking to a mortgage broker is a good idea, as they will be able to advise you on the deals available to you based on your circumstances.