How Can Equity Release Help You Buy Your Dream Property Abroad?

Older Couple relaxing In their Home Abroad-minIf your over 55 and looking to Buy your Dream Property Abroad take a fresh look at later life lending. A lifetime mortgage on your property at home in the UK may be the answer.

During the long winter months, moving to a place in the sun sounds like a wonderful idea. As we get older many of us have dreams of spending some of our time in a property abroad; somewhere with a slower pace of life and year-round warm weather to keep us healthy.

Once you’ve decided on location, raising the capital to make it happen can be a challenge.  Foreign currency mortgages often require extensive underwriting involving income and affordability checks.

A flexible ‘Lifetime Mortgage’ taken on your primary residential property in the UK in effect, releases the funds required to purchase your dream property abroad. There are NO restrictions on where you can buy and to qualify you need to own your own home (or have a very small mortgage) and be over 55. The amount you can borrow is lower than with a traditional mortgage. Interest rates are ‘fixed for life’ so there are no nasty shocks down the road with any increase in monthly payments if you decide to service the interest.

Advantages to a ‘Lifetime Mortgage’?

You can choose to make monthly interest payments, in effect making the mortgage and ‘Interest Only’ mortgage or, make no payments at all allowing the interest to ‘roll up’ over time. * You are not committed to the monthly payments which can be in fact quite flexible. If in the future you find the payments un-affordable, perhaps due to full-retirement or a change in personal circumstances, you can stop making the interest-only payments altogether and allow the interest to roll up. This flexibility does NOT in any way affect your dream property abroad which you own free and clear.

What might you be able to borrow?

As an example, if your 68 and own a home worth £240,000 then you could potentially borrow approximately a third of it’s value; £80,000 at an interest rate of 4.69% fixed for life* (*interest rate levels vary depending on your personal circumstances, product chosen etc). Servicing the Interest monthly by Direct debt your required payment would be £312.67 per month.

The above is a sample rate and will depend on your personal circumstances, taking professional independent advice is one of the most important elements when considering a Lifetime Mortgage.

Downside to Equity Release – Lifetime Mortgages

  • Interest rates are potentially higher than mainstream lenders offering regular foreign currency mortgages which are affordability assessed.
  • If you allow interest to ‘Roll Up’ (* The amount owed on the loan can mount up quickly as interest is compounded.)
  • You can only leave your home to your beneficiaries as an inheritance if the loan is repaid to the lender.
  • Any means tested benefits may be affected – releasing the cash from your home could increase your income or held savings, in turn this may affect your entitlement to any means tested state benefits.
  • There may be fees to pay – you may have to pay arrangement fees and professional advice fees.


Make sure that you always look at the numbers and always take professional independent advice when it comes to making such a big life decision. There are pros and cons to every situation so make sure that you have also discussed this with your family/children as their inheritance may be affected.

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