Introduction
If you are resident in the UK, raising capital against your home is
a cheap and straightforward way of getting hold of some cash. Funds
can be raised either by taking a further advance from your lender
or by remortgaging your existing home loan and increasing its size.
But you must have sufficient equity in your home and, even if you
do, you may be uncomfortable with the idea of using your family residence
as security on a holiday home.
Lending criteria
How much you can borrow to purchase a property in the UK depends on
your income and the size of your deposit. Unusual requirements are
very much the norm, rather than the exception for our clients and
we will always endeavour to achieve a suitable solution to whatever
circumstances you may present us with.
Releasing equity
Equity is the proportion of your property that you own, i.e. the part
that has no mortgage on it. For example, if you own a property worth
£200,000 and have an outstanding mortgage of £90,000,
you have £110,000 of equity.
This can be used to purchase a second home or investment property.
You can raise up to 90% of the value of your home as a new mortgage
to purchase a second home. Using the above example, you could release
£90,000, resulting in a new mortgage of £180,000. The
first £90,000 covers your original mortgage; the balance can
be used to buy that dream villa in Spain, cottage in France or townhouse
in Italy.
Borrowing in foreign currency against
your UK property
You can borrow against your UK property in a foreign currency, such
as Euro, Dollars or even Yen. This is aimed predominantly at portfolio
investors but it is possible to borrow in foreign currency. Seek
specialist advice before choosing this option: our international advisers
can assist you.
This may make sense for someone with a property portfolio in excess
of £1m when you consider that you pay around 6% for a UK buy-to-let
tracker mortgage, compared to 2.75% if you borrow in Euro. Borrowing
in a foreign currency on a UK asset has inherent currency risks. Seek
specialist advice before choosing this option: our international advisers
can assist you.
Insurance
Buildings insurance is compulsory. While you don’t have to take
out life assurance, it’s advisable to set up a policy. SPF can
provide independent advice for all your insurance needs.
Applying for a mortgage
It is advisable to arrange a mortgage in principle before committing
to a purchase. This will enable you to find out how much you can borrow,
so you don’t waste time looking at properties beyond your budget.
Even if you haven’t found a property that you wish to buy, our
international division can help you to establish your affordability
and issue an approval in principle based on your current financial
situation.
If you have already found a property, we will send you a full application
pack via email or in the post. If the property is still under construction,
we can keep your file open until you tell us it is ready.
Contact SPF on 020 7877 4710 or email international@spf.co.uk
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS
ON YOUR MORTGAGE.
CHANGES IN THE EXCHANGE RATE MAY INCREASE THE STERLING EQUIVALENT
OF YOUR DEBT.
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SAVILLS PLC - INTERNATIONAL DEPARTMENT
SPF is part of the Savills Group, the international property consultancy formed in 1855. The Savills plc International team is
based in London and is dedicated to providing a service to meet an individual's overseas property needs.
For more information about Savills plc - International click here.
