Refinance of a UK Property to Release Equity for a Purchase Overseas

• Client: UK nationals and UAE residents
• Property Value: Above £2.5 million
• Loan Amount: Circa £1.8 million
• Purpose: Release equity for an overseas property purchase

Enness was approached by UK nationals who were resident in the UAE and looking to release equity from their UK residential property to fund the outright purchase of a property overseas. Their UK property was already rented out, providing an additional source of income, while the clients also had substantial personal income that could be considered as part of the affordability assessment.

The clients required approximately £1.8 million of borrowing against a property valued at more than £2.5 million. They wanted to maximise the available borrowing while retaining a significant proportion of the mortgage on an interest-only basis to help manage the ongoing monthly payments.

There were several challenges for the lender to consider. The clients were UAE residents with income and financial commitments across jurisdictions, while the property securing the borrowing was in the UK. The lender also needed to be comfortable considering the clients’ personal income alongside the rental income from the property when assessing affordability.

Another important consideration was the intended use of the capital. The clients planned to take the released funds outside the UK to purchase an overseas property outright. Not all lenders are comfortable with substantial equity being released from a UK property for this purpose, making lender selection particularly important.

Enness approached the market and identified a lender able to consider the clients’ international circumstances, the level of borrowing and the proposed use of the funds. We successfully negotiated a buy-to-let mortgage that met the clients’ key requirements, including borrowing at a competitive loan-to-value and retaining a substantial interest-only element.

The mortgage was also structured on a Bank of England Base Rate tracker, allowing the clients to benefit from any future reductions in the base rate, subject to the terms of the facility. Despite the complexities around the clients’ residency, income structure and intended use of the capital, the application was successfully credit approved.

This case demonstrates the importance of taking a holistic approach when arranging finance for UAE-based clients with UK property interests. Cross-border transactions can require a lender to consider not only the property and rental income, but also overseas residency, personal income, repayment structure and the intended use of any capital released.

For clients looking to release equity from UK property while living overseas, remortgage solutions can provide an opportunity to restructure existing borrowing and raise additional capital, subject to lender criteria. Where the property is already let, a specialist buy-to-let mortgage may also be appropriate depending on the property, rental income and client's circumstances.

Enness has a presence in Dubai and specialises in helping international and Middle Eastern clients navigate complex UK and cross-border finance requirements.

If you are based in the UAE and looking to release equity from UK property for an overseas investment or purchase, speak to a mortgage specialist to discuss your requirements.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, affordability, valuation, underwriting and lender criteria. Interest-only borrowing requires an appropriate repayment strategy, and the full capital balance remains outstanding during the interest-only period. Property values can fall as well as rise, and failure to meet repayment obligations could put the property used as security at risk.