Investing and Mortgage for Tier 2 visa holders

 I have a few friends on a Tier 2 work visa in the UK and together, we have done a lot of research regarding a few financial situations. In this post, we will discuss the rules when it comes to investing in stocks and buying a house (getting a mortgage). Please note this is not considered financial or legal advice but based on my research and you are always advised to check the government website for the latest rules and advice. The rules can change quickly in some situations so always check.

Can You Buy Stocks As A Tier 2 Holder?

Since there are no specific restrictions, you can invest in stocks in the UK while on a Tier 2 visa. But there are some restrictions:
  • The investing can't become a second job and you can't do it as a representative of your employer.
  • There are specific rules for taking a second job on a Tier 2.
  • You can't own a certain amount of shares in your employer's (your sponsor) company. However, this seems to be old as I couldn't find it on the official websites so better to avoid this sort of situation.

So what do you need to be able to buy stocks and shares? You only need to be:

  1. Over 18 years old
  2. A UK resident

If you open a normal trading/investing account you would need to declare any income/profit to HMRC, however, if you open a stocks and shares ISA which is tax free up to a certain limit (for this tax year (2020/2021 it is £20,000). The eligibility for an ISA account are the same as above. But there is one more thing to consider:

Who is considered a UK resident?

For most Tier 2 visa workers, in full time employment, they are considered UK residents (domicile in the UK). If your situation is more complicated, the current guidance according to the government is that you are considered a UK resident if:

  • You have lived in the UK for 183 days during this tax year.
  • If your the only home you have is in the UK. 

If you work full time outside the UK, you are not considered a resident (obviously this is almost impossible for most people on Tier 2 visa). For a full official explanation of the rules check the website.

 Before you start investing, please learn about trading/investing and make sure you do your due deligence and research before investing any money in the stock market. Most beginners are advised to start with a practice account, to only invest small amounts that they can afford to lose (your capital is always at risk) and to invest in ETFs and funds. For Muslims, there are also some more restrictions from a religious point of view but that is beyond the scope of this post.


Buying a House in The UK With a Tier 2 Visa

You can buy a house and get a mortgage while on a Tier 2 visa and there is no official restriction regarding this. You can also apply for help to buy if you meet the eligibility criteria. However, there are some things you need to consider carefully. Here is the deal: it is up to the lender to decide based on your circumstances. Lenders want to make sure you can afford to pay your loan and your immigration status is only relevant if it affects this.

For starters, the lender would consider the time you have spent in the UK so far and how long is left on your Tier 2 visa. Most lenders need a minimum stay in the UK for 2 years and it is also good if you still have at least a year on your current visa (this is variable). Why does tihs matter? I will explain below. For many workers, for example doctors in permanent positions or in training, they are likely to easily extend their visas so that is also taken into consideration.
After that, you need to consider other things that apply to anyone else who is applying for a mortgage. Credit history is an obvious one and the fact that you will need to have lived in the UK for 2 years allows you to build good credit history. Make sure you pay anything that you owe on time during this time (credit card, car lease if you have one, etc) and avoid any delays in paying debts or penalties from banks. 

The best thing to do early on while you are still looking for a property, is to speak to a mortgage advisor, and try to speak to more than one. Some advisors have access to more banks/lenders than others and can get you a better deal. Also, some lenders are willing to lend you a maximum of 80% LTV (loan to value) while others can lend you 90%. From the people I know and my research online, Halifax and Barclays seem to be the most Tier 2 friendly but this is just my observation and not based on statistics. I have also found someone online who said they got a mortgage with HSBC. Other factors that could help is if you have a short time left before you apply for ILR or your spouse is British (although that it not a major factor).

To strengthen your mortgage application on Tier 2 visa:

  • Build up a good credit history
  • Apply after you have spent 2-3 years in the UK
  • Prepare all paper work in advance
  • Speak to a few mortgage advisors
  • Start saving early on for a deposit
  • Have a clear plan re visa extension and know exactly when you would be eligible for ILR (indefinite leave to remain)

Bonus tip: ask around and search for alternative or extra options. For example, some NHS workers or keyworkers can get discounts if they are looking for a mortgage in some areas (there are specific local rules depending on the hospital, area, salary, etc).

I hope you found this summary of the rules helpful. What else do you wonder if you could do while on a Tier 2 visa? Let me know in the comments!  As I mentioned above, please check the official websites for the latest information on rules and exceptions and speak to a financial advisor.

No comments:

Powered by Blogger.