What is an overseas mortgage?

An overseas mortgage is a mortgage for a property that’s not in the UK. Overseas mortgages are usually advised on by overseas mortgage brokers who have knowledge on this niche.

If you are considering buying a holiday home abroad then an overseas mortgage may be just what you are looking for.

An overseas mortgage may be an option if you want to buy property abroad and escape the rising UK prices.

You may be able to get an overseas mortgage from a UK mortgage lender or an overseas lender. In some cases, borrowers remortgage their UK properties and use the funds to purchase an overseas property or use the funds as a mortgage deposit for overseas property.

This may not be the most suitable option for you and you should seek mortgage advice before doing this.

Mortgage deposits on overseas mortgages ten to be much higher as mortgage lenders try to de-risk themselves. You may be required to pay a mortgage deposit of between 3% and 40% so the mortgage lender may have a loan to value of around 60%.

Is remortgaging your home for an overseas mortgage good?

Remortgaging your UK home could be a straightforward way to raise fund to purchase an overseas property or raise a mortgage deposit for an overseas mortgage but this isn’t always the best option.

It could be a good option if you have enough equity in your home and mortgage rates are down.

If your credit score is relatively good then this could also be a good option.

If you have bad credit hence any of the below then remortgaging may not be a smart financial decision.

Bad credit could be:

  • A CCJ
  • An IVA
  • A debt management plan
  • A default
  • A bankruptcy
  • A home reposession

You may also be able to get an overseas mortgage from a UK bank.

This could be beneficial to you as you may already have an existing relationship with the mortgage lender.

Most UK mortgage lenders have an overseas mortgage product but they will only lend in particular countries.

You or your mortgage broker will need to find which countries UK mortgage lenders offer their overseas mortgage in.

Although the mortgage may be set up through the UK bank, you would deal with the foreign arm of the bank once the mortgage had been arranged.

Get an overseas mortgage abroad

Your final option is to get an overseas mortgage abroad using a specialist mortgage broker who can introduce you to lenders abroad who may be willing to lend to you.

Some mortgage rates in mainland Europe may be much competitive than what is on offer in the UK.

Overseas mortgage brokers are not covered by the financial services compensation scheme and you will not be able to get any compensation if anything goes wrong.

By getting an overseas mortgage you will be borrowing in a foreign currency and you should consider the consequences of this if exchange rates fall or rise in the UK( if your income is generated in the UK).

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.