International Mortgages and Property Finance

International Mortgages and Property Finance

With the summer holidays in full swing and many of us spending time abroad, now might be the perfect time to think about purchasing a vacation property. Alternatively, you may be thinking about buying property abroad to generate rental income and benefit from an asset that has appreciated in value in the future. Whatever your reasons for contemplating making an international property purchase and wherever you want to buy a residence, here’s what to consider when it comes to financing and mortgages. 

Financing An International Property Purchase: What To Know

  • International mortgages can sometimes take a little longer to arrange than a domestic property purchase because of the more stringent underwriting process banks will undertake before lending to non-resident borrowers
  • Financing is readily available for investment properties, trophy homes and holiday homes. There are usually multiple options are products available to you, including high loan-to-value mortgages, interest-only mortgages and, in some cases, dry mortgages. We may also be able to negotiate that you can pay interest upfront or in other ways, either to facilitate access to an international mortgage or to get you a more competitive package
  • Beyond usual legal and compliance regulations and affordability criteria, international mortgages are accessible regardless of your nationality or country of residence – including US nationals
  • International mortgages and international property finance can be run through corporate structures to facilitate lending rather than in the name of an individual borrower
  • Lenders are generally keen to offer international mortgages against high-value property in established, liquid property markets worldwide
  • Getting a mortgage on every kind of property is not always possible in continental Europe. Lenders are often very hesitant to lend against old French chateaux or Italian villas outside prime property regions that need to be renovated, for example, can be very tricky to finance. The same will be true of similar property types in Spain and Portugal

 Private banks (international or domestic, depending on where you want to buy property) are some of the best lenders for international property purchases as they take a more holistic approach to your wealth, affordability and can offer advantageous products for you as a wealthy borrower, such as interest-only loans.

European Property Purchases

Europe has largely unrestrictive laws on foreign property investment. However, at the country level, there can be some restrictions on where you can buy property – Swiss law dictates specific regions where non-residents can own property for example.

If you want to purchase European property as a non-resident, private banks generally offer the most competitive mortgages of €1 million or more. Private banks will usually take a holistic approach to considering your background and suitability regarding a mortgage than their retail bank counterparts. Private banks can offer products suited to you as a high-net-worth borrower, including interest-only loans (although placing assets under management is usually a requirement). However, in some cases, lenders offer dry, interest-only mortgages, although we need to negotiate these transactions carefully, as they are especially niche and not offered by many lenders.

The caveat is that private banks will usually only offer mortgages in Europe’s most liquid and sought-after regions rather than across the whole continent. We can provide information on where banks will lend, but to give an idea, it is usually possible to get prime mortgages in the Cote d’Azur region, Paris and prime ski regions in France, the Italian lake region, in major Swiss alpine resorts, the Algarve and Quinta Del Lago regions in Portugal, and the Costa del Sol and the Balearic Islands in Spain. It is also worth noting that getting a mortgage on historical properties outside of prime regions is particularly challenging, especially if it requires renovation work.

UK Property Purchase as A Non-Resident

For anyone living outside the UK, buying a UK property as a non-resident will also count as an international purchase from a lender's perspective. Foreign investors looking to buy UK property hail from around the world. However, American, Middle Eastern, French, Swiss and Asian investors are some of the most prevalent buyers of UK property. London remains a popular hub for buy-to-let investments given the constant demand for rental property in the city and rental yields, but trophy homes and holiday homes are also sought-after, both in the capital and further afield.

The UK has one of the world's largest and most competitive mortgage markets. While private banks tend to be the 'go-to' lenders for continental mortgages for non-resident buyers, the UK offers more lender choices. As a result, alternative and boutique lenders may all be options for you.

If you are a suitable candidate, we will explore occasional-use mortgages and high-net-worth exemption mortgages from retail lenders or private banks for a UK property purchase. Many products and financing solutions are available for non-residents, and we will always advise you on the most suitable for you. Both occasional use and high-net-worth exemption mortgages can be ideal if you are a wealthy individual looking to make a UK property investment, as they may mean you can opt out of regulated oversight to have your lender take a more holistic approach to underwriting. This means your lender can make a lending decision based on your net worth, global assets and profile, rather than purely on more stringent affordability criteria.

Just as in continental Europe, private banks are some of the best lenders for a high-value mortgage if you are looking to buy in the UK as a non-resident. However, one key difference is that not all private banks that offer UK mortgages to non-residents will require you put assets under management, which tends to be a prerequisite in continental Europe. In many cases, UK private banks can offer highly competitive 'dry' mortgages to property investors, even for large mortgages (depending on your financial situation and background). However, it is worth noting that placing assets under management will usually allow you to access a private bank's most competitive mortgage rates and products. We will always talk you through all your options so you can understand the potential savings, advantages and drawbacks of your options.

Fast Finance For International Property Purchases: Bridging Loans

In some cases, you may want to complete an international property purchase as quickly as possible. Lenders are increasingly efficient in delivering international mortgages and property finance, but the process can sometimes take longer than you want.

Banks typically can't complete international mortgages in less than about eight to twelve weeks, so if you want to take ownership of the property in a couple of weeks, you'll need to look at an alternative financing solution. You may also want a financing solution that allows you to compete with cash buyers rather than going through the mortgage application process, which some sellers might prefer. In other cases, you may not want a mortgage for any number of reasons, ranging from practicality to your plans for the property.

Bridging loans offer alternative property finance that allows you to draw down a loan exceptionally fast – often in just a couple of weeks, even for an international property purchase. The speed with which we can arrange a bridging loan means you can effectively compete with a cash buyer, access capital without taking out a mortgage, etc. Bridging loans are available in the UK, Europe and for purchases further afield: Dubai, the US and Caribbean, for example.



The views and opinions expressed in this piece are those of the author and do not constitute advise or a recommendation, nor do they necessarily reflect the official policy or position of Enness. They are also not intended to indicate any market or industry viewpoints, or those of other industry professionals.