It is now possible, and we can help, to raise a second mortgage on a property owned abroad and to use the funds raised as the deposit on another property. This can, depending on the circumstances, result in you being able to raise 100% of the purchase price without needing to touch the equity in your UK home or any other savings - the ideal mechanism for expanding your property portfolio.
Use borrowings to best effect
As I mentioned in a previous article savvy property investors tend to be prolific users of borrowings (or gearing). This enables them to use as much of of the banks' money as possible to build up their own asset base over time. By adding overseas remortgages to the property investor's armoury this has now become even more feasible.
For example, if you owned a property that was bought for €200,000 with a 70% mortgage and is now worth €300,000 (even assuming the mortgage has not reduced much below the original €140,000) you have at least €160,000 of equity in the property. Now assume that you could raise a mortgage of 70% in total, or €210,000 - that gives you an additional €70,000 to place as a deposit on the next purchase. If you can also raise a 70% mortgage on the new property that gives you the ability to purchase a new home overseas for as much as €230,000 - all with someone else's money! Not bad.
Status still matters
Of course the banks will still want to ensure you have the ability to repay the mortgages you have but as long as your income is sufficient (and in many cases up to 80% of any rental income from your property can be included) then raising these mortgages should be relatively straightforward. As always, the normal warnings apply (your home may be at risk if you keep semtex in the microwave, etc etc!) but for those who are aware of the principles behind using leverage (gearing) to expand their asset base this is a highly significant development in the market.
If you would like more information send us an email or call us on the number at the top of this page.
