Overseas buyers turn to mortgages to buy luxury properties

Increasing numbers of wealth overseas buyers are using mortgages to purchase luxury homes in Britain, research suggests.

Analysis by real estate adviser Karis Capital found that the number of residential mortgages worth £5million or more rose to 333 last year, up from 313 the previous year.

This was attributed to a dip in cash buyers in the luxury market.

The total value of all 333 regulated mortgages worth £5million or more last year reached £3. billion, with the average prime residential property loan standing at approximately £10million.

Even when wealthy people have cash to buy luxury properties, many are choosing to borrow because it allows them to preserve capital for other investments.”

Karis Capital says London continues to dominate Britain’s luxury property market. Of the 333 mortgages worth £5million or more completed last year, 88% (292) were secured against London properties, up from 84% (263) of the total the previous year.

Only eight of the 333 residential mortgages above £5million were for properties outside London, the South East and the South West last year highlighting a stark divide in the super prime market in the North and South of England.

Change in approach

Francesco Amato (pictured), Senior Debt Advisor at Karis Capital, says: “The increase in mortgages worth £5million or more reflects a change in how wealthy buyers are approaching the luxury property market.

“Even when wealthy people have cash to buy luxury properties, many are choosing to borrow because it allows them to preserve capital for other investments.

While the change in the non-dom rules has had an impact, many see the current drop in luxury property offers compelling long-term investment opportunities.”

“London remains one of the world’s premier destinations for international wealth and continues to attract buyers from across the Middle East and Asia. While the change in the non-dom rules has had an impact, many see the current drop in luxury property offers compelling long-term investment opportunities.”

Francesco adds that arranging finance at this level requires far more than simply securing the lowest interest rate.

He explains: “Luxury property finance is a highly specialised area of the market. Borrowers often have complex income structures, international assets or bespoke lending requirements. A tailored borrowing plan can make a big difference to both the speed of a luxury property purchase and the overall outcomes and returns.”

The post Overseas buyers turn to mortgages to buy luxury properties appeared first on The Negotiator.

Author: Gemma