Borrow against a foreign property

dangsy1981

Will any lenders allow us to use equity tied up in a property abroad in lending against a residential property? I.e My wife owns a property aboard and we would like to use this to allow us to increase the amount that we can borrow on our residential home. 

AdrianC

Of course. You just mortgage that property. It may be easier to get a mortgage from a lender in the same country as the property.

Whether it'll increase the amount you can borrow for your home purchase is another question, because the lender you're getting the mortgage from will regard it as debt.

Don't forget the +3% SDLT, assuming the foreign property is worth more than £40k-equivalent.

steampowered

You would probably need to get a loan from a lender in that country.

Banks cannot take a UK mortgage over a foreign property. The security which the bank takes over the property would have to be done under the local law arrangements by the local law equivalent of a solicitor / conveyancer.

Some UK lenders allow you to use non-UK income to support a UK mortgage, so it may be that overseas lenders would allow you to count your UK income to prove affordability? 

eddddy

What you would have to do is take out a mortgage on the foreign property, and then use that money as part of your deposit for the UK property that you want to buy.

I suspect that getting a mortgage on a foreign property is difficult, but here's what Which? say:  https://www.which.co.uk/money/mortgages-and-property/overseas-property/overseas-mortgages-explained-a77pw6t9cqqd


They mention using a mortgage broker based abroad as one option. You'd need to be very careful, as I suspect there are many people calling themselves 'brokers' in many countries who look out for naive foreigners who they can rip-off.  And if it all goes wrong, for example, taking somebody to court in a foreign country using a foreign language might be a challenge.

MaryNB

If you're considering using a foreign property as collateral, I read up briefly on this a few years ago. I believe it is difficult to do because it will be more difficult for a UK bank to claw back anything from a foreign property compared to a UK property if you default on your UK mortgage. Different countries, different laws etc.