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Releasing Equity From International Property

11th Jul 23 - 6 MIN READ

If you want to access capital quickly and you have a holiday home, trophy property investment or buy-to-let property (or a portfolio of properties), you can often use these assets as security for a loan. Lenders that offer equity release – a type of short-term finance often known as a bridging loan – can arrange these transactions at pace, meaning in many cases you can draw down loan capital in as little as 1-2 weeks. 

 

Who Can Access International Equity Release?

 

As long as you are compliant with relevant AML, KYC and legal restrictions or sanctions, if you own a high-value international property in a popular location (which is to say a liquid property market), lenders can usually consider offering you a loan secured against your property. 

 

Releasing equity from ‘international property’ is often thought of as something that is available exclusively to UK residents that own property in Europe. This is, of course, perfectly possible, but equity release is very possible in other cases, too. If you own prime property in London but you don’t reside in the UK, for example, you may still be eligible for a bridging loan. Likewise, residents of other countries that own international property can also release equity from these assets. Releasing equity from a property in France, Switzerland, Spain, Monaco, Italy, the Caribbean, Dubai and the States, for example, is possible, regardless of where you are resident or where you want to deploy the loan capital. 

 

In short, Enness can broker equity release deals where you are:

 

  • A UK resident that owns prime property abroad
  • A non-UK resident that owns luxury property in the UK
  • Expats that own prime property in their country of origin but live abroad

 

International Equity Release: Considerations

 

  • You can release equity from holiday homes, buy-to-let properties, investment or trophy property, even when you are not a resident of the country in which you wone property 
  • If you own multiple properties in different countries, some lenders will allow you to use multiple assets to increase the amount you can borrow. For example, two high-value properties worth £10 million each in two different justifications could be used as security for a £5 million loan 
  • Enness broker international equity release deals of £1 million or more, with no upper limit on loan size, provided your profile and the value of the asset support the amount you want to borrow
  • Loan-to-value ratio (the amount you can borrow against the value of your property)
  • Loan capital 
  • There is generally no restriction on where the asset that is used as collateral is based, but usually, lenders want to see a high-value property in a prime and liquid market
  • Enness can introduce you to lenders that can offer equity release loans in jurisdictions where it can be challenging to release equity as a non-resident, including Dubai and the Caribbean
  • Loan capital can be structured through corporate entities, including in scenarios where a corporate entity is the borrower
  • No limitations on the jurisdiction of the borrower/UBO, provided you meet legal and compliance regulations

 

Use Cases

 

International equity release remains a relatively niche part of the lending market. Not all lenders off this type of finance, and those that do tend to be niche players that specialise exclusively in the space. 

 

Because using international properties as security for a loan requires very specialist structuring, underwriting, risk and technical capabilities from the standpoint of being able to finance and execute a loan, the lenders that operate in the space are adept, agile and tend to offer loans on a case-by-case basis, rather than as a product. 

 

As a result, you will find that lenders can consider offering you a loan in plenty of different scenarios – even if they are unusual or ambitious. As long as your financial background, reason for borrowing, the quality of the asset, loan amount and loan-to-value ratio (LTV) and your plan for repaying (exit) the loan all add up in terms of feasibility and numbers, we will usually be able to negotiate a deal for you.

 

There are nearly unlimited ways you can use the capital raised via an equity release loan. However, common use cases include:

 

  • Paying off significant or unexpected liabilities
  • Consolidating debt
  • Investing in a business or projects that will accelerate a business’ growth
  • Investing in a high-ROI project
  • Buying property quickly without a mortgage
  • Raising capital to pay a divorce or other settlement
  • Creating liquidity to buy out a business partner or other investors
  • Buying securities or diversifying a portfolio of assets
  • Purchasing luxury assets

 

Cross-Border & Multi-Currency Lending

 

International equity release is what’s known as cross-border by nature: the asset and borrower are usually in different jurisdictions. This doesn’t pose any kind of problem for lenders who are used to structuring deals so that an international asset can be used as collateral for a loan – usually, this will require specialist configuring of the deal, an ability to underwrite a loan in another country and consider any legal requirements that are applicable in the jurisdiction where the property is located. Because lenders can are used to dealing with lots of different locations, if you are eligible for a loan, you will usually also be able to deploy the capital cross-border: in a different country to where you reside or where the asset is. For example:

 

  • A luxury property on the Cote d’Azur is used as collateral for a loan.
  • The owner is an UHNW British-Spanish couple, residing in Dubai. 
  • The owners will borrow through a UK limited company to invest in a growing UK business. 
  • The property is valued in euro, but the lender will write the loan in pound sterling to facilitate the use of the loan capital in the UK

 

As shown above, lenders won’t only lend in the currency the property is valued in. Instead, they can usually offer finance in the currency that is most convenient for you, depending on how and where you will deploy the loan and, in some cases, how you will exit the loan (i.e., the currency you will have the loan repayment in). 

 

Borrowing Via Structures

 

If you own prime or luxury international property, you may do so through a company rather than in your own name. The lenders that offer international equity release will offer you the possibility to borrow through a corporate entity. It is often practical to do so if you want to optimise the deal from a fiscal perspective, ring-fence it legally (i.e., by mitigating personal risk or maintaining privacy) and so on.

 

While many mainstream lenders can struggle to lend in deals where the borrower is a corporate entity – especially in an international equity release deal – the lenders that offer these loans usually lend on a case-by-case basis and have sophisticated company administration, wealth structuring and estate planning knowledge. This allows them to deliver deals even when there are multiple entities in different jurisdictions within a single ownership structure. As well as negotiating the most competitive deal available, Enness will work with the lender, and your tax adviser, accountant and law firm to ensure that the deal is optimised from a fiscal and legal perspective, in line with any expert advice you are given.

This guide is for information and illustrative purposes only and nothing contained within should be construed as advice or a recommendation. Financing options available to you will depend on your requirements and circumstances at the time.

Any changes in your circumstances, any known likely changes, or omissions in the information you provide can affect the suitability of the options available to you. These should be communicated to us as early as possible.

If you are considering securing debts against your main home, such as for debt consolidation purposes, please think carefully about this and consider all other options available to you.
Your home may be repossessed if you do not keep up repayments on your mortgage or other debts secured on it.