The average price of these properties was around £220,000, but in 31% of cases they were under £100,000. A further 28% were between £100,000 and £200,000 whilst only 4% were worth over £500,000.
The average deposit they had was 21%, but in 56% of cases those trying to buy a property abroad had a deposit of over 50%, says the research from mortgage firm Castle Trust.
In seven out of 10 of these cases, 71%, they had 40% or more equity in their UK homes and would have been eligible for a loan, according to the firm which offers partnership mortgages.
‘It has been well documented that as a result of the financial crisis, residential property prices in the more desirable parts of Southern Europe have fallen dramatically, and this has tempted many to pick up holiday home bargains,’ said Sean Oldfield, chief executive officer, Castle Trust.
‘In practice, however, they often need to secure a local mortgage and this can be very difficult to do. However, with products like our Partnership Mortgage many home owners seeking a property abroad can release 20% equity from their UK home and use this instead of trying to persuade a local bank to help,’ he explained.
‘Depending on how much equity is available, they may be able to buy outright, or only require a very small mortgage, which should be more easily obtained,’ he added.
He pointed out that Castle Trust charges no rent or interest on the loan and there are no monthly payments to make. Instead it shares 40% of any increase in value on the sale of the property from the date when the equity mortgage was taken out. If the value of the home declines or stands still, borrowers only repay the original loan amount with no interest at all.
Oldfield said that other benefits include the stability of long term funding with a term of up to 30 years, no early repayment charges and reduced exposure to rising interest rates.
