Basic Mortgage Questions

First off, my timeline:

I came as a student in 2011, left in January 2013.
I came again as a student in September 2013, left in January 2015.
Came on a fiancee visa in June 2015, granted FLR(M) in October 2015.

I've been working as a temp since January 2016, but should get a permanent job in the next month or two.

1.  I've not yet built up any credit in the UK, should I get a credit card just to get that going?

2.  Once I have permanent work, my husband and I would like to buy a house on a joint mortgage, but it sounds like it may be difficult to be approved straight away.  How long should I work on a permanent contract before looking for mortgage approval? 

3.  What are the US tax implications for having a joint mortgage?  My husband is the principal earner, but we couldn't afford anything on his salary alone.

4.  How much more difficult is it to be approved for a mortgage while on the first round of FLR(M)?

Basically, I had my hopes up that we could be joining the property ladder soon.  I'm afraid it looks like if we want to move out of his family's home we'll have to rent in the meantime.  Advice?

Many many thanks in advance!

Find an independent mortgage broker who will only show you lenders who will grant you a mortgage while on FLR(M).  They'll be able to answer a lot of your questions, as it will depend on the amount of mortgage and loan/debt ration on how long you will need to have been employed for, contract type, etc.

Be prepared to need a larger deposit and/or have a higher interest rate than UK citizens.  Not crazy different, just more.  I have a mortgage in the UK now and it's only a bit higher interest than if I was a citizen.

The biggest US tax considerations are surrounding capital gains when you sell the house (over $250k and you'll be taxed) as well as fx rate.

Thanks for your quick reply.  We'll look into brokers and see what they have to say.  It hadn't even occurred to me until recently that my visa status could affect that, makes sense though.

Re: Taxes, I won't worry too much at the moment then, if we buy something it's unlikely we'd sell for quite some time after that. One small bonus to the pound plummeting I suppose...

Hi Pocketdem,

Some good information as usual from KFDancer above !

Whereabouts in the UK would you be considering purchasing? what kind of property too?

It's more difficult now to get a mortgage approval in the UK, the lenders have tightened their criteria for eligibility, you'll need an excellent credit history or as best as you can build one up in the timeframe you are thinking. The added layer of complexity is your legal status etc so research those further and in more depth. The lenders will be asking you all about your income, expenditure levels, savings levels and lifestyle choices and they will be quite in depth.

The best route to aim for to reduce the risk that lenders will be assessing is to put down a substantial deposit - 30-45% I think will be the levels you could be looking at, hence why I asked the area and types of property you'd like to go for.

I could write some more but I'll wait till you mention those areas you'd like to go for.

Cheers, DtM! West London & Slough UK!

There's a mortgage company called John Charcoal (sp?) that found a mortgage for us when my visa status was dodgy.  They weren't the cheapest but they did send a guy around to explain everything.

There's a mortgage company called John Charcoal (sp?)

'Charcol'.  They're mortgage brokers. 

Hi Pocketdem,

Some good information as usual from KFDancer above !

Whereabouts in the UK would you be considering purchasing? what kind of property too?

It's more difficult now to get a mortgage approval in the UK, the lenders have tightened their criteria for eligibility, you'll need an excellent credit history or as best as you can build one up in the timeframe you are thinking. The added layer of complexity is your legal status etc so research those further and in more depth. The lenders will be asking you all about your income, expenditure levels, savings levels and lifestyle choices and they will be quite in depth.

The best route to aim for to reduce the risk that lenders will be assessing is to put down a substantial deposit - 30-45% I think will be the levels you could be looking at, hence why I asked the area and types of property you'd like to go for.

I could write some more but I'll wait till you mention those areas you'd like to go for.

Cheers, DtM! West London & Slough UK!

All good points.  We live in East Kent, where property ain't cheap.  Not as bad as London obviously but definitely more expensive than the rest of the country.

I've heard of those larger deposit schemes...our family would help us with a 10% deposit but I don't think they could go as far as 35-40, that's asking a bit much.  We've been looking in the 180-220,000 price range for a 2 bed house. 

If we have to wait a few years and let my credit build then so be it, we'll find a place to rent in the meantime.  It's good to know where we stand.

All good points.  We live in East Kent, where property ain't cheap.  Not as bad as London obviously but definitely more expensive than the rest of the country.

I've heard of those larger deposit schemes...our family would help us with a 10% deposit but I don't think they could go as far as 35-40, that's asking a bit much.  We've been looking in the 180-220,000 price range for a 2 bed house. 

If we have to wait a few years and let my credit build then so be it, we'll find a place to rent in the meantime.  It's good to know where we stand.

My mortgage was a 10% deposit.  I know several other expats with similar deposit amounts.  I think after the recession it was expected to have a larger deposit without ILR, but not anymore.

Hi Pocketdem,

Thanks for the update! So, yes in the South East is where you're looking and I don't need to tell you what a crazy level of property values are at!

Mortgage approvals are indeed significantly down currently,  the lowest level in 18 months as of July 2016, at around 18% down compared to July 2015. A couple of factors, People have been putting off 'big(ger) purchases but have been ramping up spending on credit cards after the Brexit vote. This 'uncertainty' over what an 'actual' Brexit 'divorce' will look like is meaning people aren't wanting to commit to a mortgage. Re-mortgaging is up over the year.

The overall effect with all of that and the fact employers are looking to cut costs with wage/salary of employees, the direction of house price reductions is likely along of course with an economic slowdown to an extent.

Just my view, I wouldn't want to be buying currently without a substantial deposit and/or a more 'secure' longer term basis of income levels. However, on the flipside, I do know many people indeed do wish to purchase still and those who can currently will press ahead.

I obviously don't know your personal financials and income levels etc, but the complexity of your resident status, the whole 'immigration' thing and uncertainty over how that will look longer term etc means your application currently and over the next 2-5+ years will be more difficult. Save as much towards a deposit as you possibly can and see if you can increase it past the 10% level as that's where 'most' others are as well !

KF Dancer - With the levels of application scrutiny nowadays there's perhaps been a softening on needing 'bigger' deposits, especially for first time buyers. It's still nothing like the stupid days when no deposit was needed and the sillier 125% mortgages, but when it comes to those with more 'complex' situations, including those who've not lived in the UK for very long, the mortgage providers are 'jittery'. Recently, the whole insurance underwriting industry is similarly more jittery and as such, costs for insurance premiums are on the increase too. What's definitely helpful is showing evidence of a substantial deposit 20% plus - but as you've mentioned, it does indeed vary from lender to lender.

Cheers! DtM! West London & Slough UK!