UK Mortgage for Overseas Property

If you’re a UK resident looking to buy property in Europe, you may be wondering if you can secure a UK mortgage for overseas property. On the surface, this may seem like an easier process—if you are working and living in the UK, it may seem like it makes sense to finance your new holiday home through a British lender.

UK Mortgage for Overseas Property: Possible?

In a word, yes—but this doesn’t mean it’s the best course of action. There are a limited number of UK lenders who will finance property abroad, so in theory, you can go down this route.

UK banks have withdrawn from international lending

In recent years, UK banks have significantly withdrawn from offering in Europe. This is because it is very difficult to repossess property in Europe, so if the borrower falls into arrears, the lender will struggle to recoup their losses.

Naturally, because there is a smaller pool of lenders prepared to arrange these international mortgages, your options will be limited. You are unlikely to be able to negotiate the best rates, and may end up paying more than you need to.

Local lenders offer local insight

Generally, I would advise you to finance your European property through a local lender. Whilst you can get a UK bank to lend in Europe, local banks have better insight and can usually offer you a better deal. French banks only do French mortgages, for example, so they have the correct processes in place and are geared towards French property. A UK bank will generally refer you to their wealth management team, but if you want a competitive dry loan, it is best to approach a local bank.

Gaining access to local European lenders

Of course, a UK lender may be appealing because you feel you know and understand the culture of the lender. If you have a pre-existing relationship with a bank who will lend internationally, this warm relationship may motivate you to approach them for a loan. You may also be hoping to approach a UK lender for language reasons. If you are not fully bilingual, you may have reservations about applying to a European bank.

Using a broker such as ourselves is the best way to mitigate both of these concerns; myself and my team are fully multi-lingual, and have a huge network of excellent contacts. We can help you to build a new relationship, securing you the best possible rates.

UK Mortgage for Overseas Property FAQs

Can I remortgage to buy another property abroad?

Yes, remortgaging your UK property to release equity for purchasing property abroad is a common strategy for high-net-worth individuals. This approach can provide liquidity without requiring you to take out a separate overseas mortgage. However, it’s essential to consider exchange rate risks, local tax implications, and the legal frameworks of the country where the property is located.

Working with an international mortgage broker can help you structure this type of financing effectively, ensuring that you maintain tax efficiency and avoid unfavorable lending terms.

Do I have to declare property abroad in the UK?

Yes, UK tax residents are required to declare any overseas property on their self-assessment tax return. Income generated from foreign properties, such as rental income, must be reported and may be subject to UK taxation under worldwide income rules.

Additionally, if you sell the property and make a profit, you may be liable for capital gains tax in the UK. However, tax treaties between the UK and the property’s location may prevent double taxation. Consulting a tax adviser with international expertise ensures you remain compliant and can explore tax relief opportunities.