Arranging finance against overseas rental properties can become more complex when the borrower is based in the UK and the assets are held through international ownership structures. I recently assisted a UK-resident investor who wanted to refinance two rental properties in New York and release capital from his US property portfolio.
I had previously assisted the client with UK commercial property finance, and following that experience he approached me directly about his New York properties. He owned two buy-to-let properties through a combination of an offshore trust structure and an American Limited Liability Company (LLC).
The client was UK resident with an international financial background and a substantial worldwide asset portfolio. The ownership structure, the location of the properties and the cross-border nature of the application meant that a conventional UK lender was unlikely to be suitable.
The objective was to refinance the existing borrowing and release additional capital while maintaining a structure that provided the client with flexibility over his wider investments.
I approached an international bank with a significant US and UK presence, knowing that its global network would be important in navigating the cross-border aspects of the application. Through the bank’s London office, I was able to engage with its ultra-high-net-worth private banking team.
The lender was prepared to take a broader view of the client’s overall financial position, including his substantial worldwide assets and wider investment portfolio. This allowed the application to be considered in the context of the client’s overall wealth rather than solely the income generated by the two New York properties.
The resulting facility provided $4 million of borrowing against properties with a combined value of approximately $7 million. The borrowing was structured on an interest-only basis, helping the client manage monthly commitments while retaining liquidity for other investment purposes.
The facility also provided flexibility to make overpayments without early repayment charges, subject to the agreed terms.
The case demonstrates how international mortgage expertise can be valuable when a UK resident is seeking finance against overseas property. It also highlights the role of property portfolio finance when multiple investment properties are held through more complex international structures.
For UHNW clients seeking substantial borrowing against overseas property, a large mortgage may provide another route to raising capital, depending on the lender, assets and proposed structure.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, property suitability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.
Risk Warning:
Property and other assets used as security may be repossessed if repayments are not maintained. Property values can fall as well as rise. Where borrowing is denominated in a foreign currency, exchange-rate movements may also affect the sterling cost of the borrowing and associated payments.
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Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
