If you can’t sell your UK home, or don’t want to, should you put your overseas property plans on hold? Not at all. Instead of struggling to sell their main home, British householders should explore alternative funding options, such as equity release to fund an overseas home.
In today’s stagnant housing market, many older homeowners are seeing their retirement dream of owning abroad delayed by the failure to find a buyer in the UK. According to Zoopla’s housing report (30/06/2026), three in five homes listed for sale since January remain on the market. Buyer demand has also fallen by 15% year-on-year, said the portal, with higher borrowing costs and political uncertainty reducing the number of home buyers in the market
For these people trying to sell, every month without a buyer is a month lost enjoying precious time at their second home in the sunshine. The good news is you don’t need to wait. There are other ways to raise finance for an overseas property purchase, including flexible ways to use equity in your UK home. If you’re itching to own a second home abroad, below is a reminder of different ways to finance it without selling up!
Being unable or unwilling to sell your main home in the UK is not the end of your overseas home opportunity. Subject to rules such as being over 55, you may have the option to release capital from the value of your main home, enabling you to enjoy the best of both worlds. The typical loan value is over £120,000, but you must remain in the UK for at least six months of the year. Not for you? There are other options, such as using your pension lump sum or simply remortgaging in the UK, avoiding those restrictions.
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Open your eyes to equity release
Research by the Equity Release Council shows that 61% of UK homeowners are interested in releasing money from their property in later life. And it’s hardly a secret how well the UK’s baby boomers have benefited from the dramatic rise of the country’s housing market.
Owner-occupiers aged 60-plus now own 55% of the UK’s housing wealth, according to data from Savills released in March this year. This is worth a record £3.84 trillion in equity, including main homes and buy-to-lets.
“Housing is clearly a massive store of wealth in the UK, especially for older homeowners who hold high proportions of both owner occupier and buy to let housing wealth,” said Lucian Cook, head of residential research at Savills.
Cue equity release, a way of releasing equity in your home – or borrowing money against the value of it – without selling it. In the first quarter of 2026, £574million was lent to homeowners this way, according to the Equity Release Council. This was spread between nearly 13,000 homeowners, including new and existing borrowers.
According to Equity Release Council data, the average equity release loan taken as a lump sum in the first quarter of this year was £127,414. That’s enough to buy a two-bedroom apartment in Spain’s Costa Blanca, a character house in rural France or new apartment near the beach in eastern Cyprus!
There are two types of equity release plans. The first and most popular by far is a lifetime mortgage. An alternative option is the less common home reversion plan.
Lifetime mortgage
Designed for homeowners aged 55-plus (sometimes available from 50), a lifetime mortgage allows you to borrow against your home’s value and continue to own and occupy it. One condition is that you live in the property at least six months of the year. This makes it suitable for anyone using the released equity to buy a holiday home, rather than relocate permanently. It also means you can take full advantage of the Schengen Area visa-free 90 days in 180.
Typically, the loan is repaid when you die or move into long-term care, usually through the sale of the property. While many people choose for nothing to be paid back until that point, you can make optional payments during the lifetime of the loan, either to keep on top of the interest and/or chip away at the loan. There is flexibility to receive your equity in a single lump sum or opt for a drawdown facility, allowing you to borrow in smaller amounts as and when you need the funds.
How much you can borrow will depend on your age, health, value of your home and how much equity you own. Lifetime mortgages are available even if you do not own outright and still have an existing mortgage on it. It is even possible to move and transfer your lifetime mortgage to a new property (so long as it meets requirements).
Avoid providers who are not members of the Equity Release Council or FCA regulated. Your chosen provider should talk through all finance options available to you and only recommend equity release if it’s the right choice in line with your needs and lifestyle.
Home reversion
Less popular, home reversion plans allow a homeowner to sell their home with the right to remain there typically rent-free until they die or move to long-term care. Most are available from the age of 60.
Payment by the provider can be as a lump sum or regular income. There is usually the option to retain ownership of a portion of your property, which you can leave to your chosen heirs.
Release equity by remortgaging in the UK
Remortgaging your UK home to release equity the usual way could also be an option. Just remember, your options are fewer as you get older. As a rule, if you’re in your 50s and have no intention of retiring for another 10 years, you should have no trouble remortgaging for another 25-year term.
Many lenders still lend to people in their 60s and those already in retirement but for shorter terms and with tighter lending criteria. The maximum age allowed at the end of a term is generally between 75 and 80. Adding a younger family member on to the mortgage could be a way to boost your borrower power or choice of products.
Retirement interest-only mortgage
Another route for releasing equity could be with re-mortgaging with a retirement interest-only (RIO) mortgage. Designed for older homeowners and like equity release plans, a RIO loan is repaid when the borrower dies or moves into care.
During the term, the borrower needs to make interest-only payments each month. This means there is no roll-up interest and the loan amount stays the same.
Overseas mortgage
Buying a holiday home abroad with a foreign mortgage could also be viable. Start by speaking to mortgage broker with experience of helping non-resident buyers. You might be pleasantly surprised at the deals available.
In countries such as France and Spain, euro mortgages with fixed rates for terms of 10, 15, 20 years are standard and typically are good value compared to the UK. Just keep in mind how you intend to make your monthly payments. If it’s using sterling funds, you’ll be exposed to the exchange rate. Speak to a currency specialist to find out ways to mitigate this.
Lump sum pension payment
Built up a significant pension pot? If you are aged 55 or over (57 from April 2028), then why not consider taking your 25% tax-free lump sum. There is a cap on how much can be taken as a tax-free from your private pension, namely £268,275 (across all pensions, in case you have more than one). Rules are different for defined benefit (final salary) pension.
You might not need to use the entire 25% to buy your overseas home, especially if combining with funds from another source. In which case use a flexible drawdown plan to take it in stages. You can discuss your options with a financial advisor, who will advise on how it could affect your overall retirement income.
Buy with family and friends
None of the above suitable for you? If you have family or friends you can count on, why not consider clubbing together with them to buy a holiday home abroad. Not only will you share the initial purchase cost, but you’ll also split all those unavoidable ongoing bills – council tax, utilities, insurance, community fees etc.
Note, information in this article is provided for general informational purposes only and does not constitute formal advice. Always seek professional advice before making decisions relating to financial and estate planning, inheritance and other related matters.
