What does physical property mean?

I have a unsecured mortgage on a property on a property abroad - what does this mean?

• I have read the contract and it says that the mortgage is secured against the foreign property (however it is unsecured). Does this mean that the mortgage company has no right to my UK property?

• Answer:

  This will have to be one of those "Yes, but" answers. By giving a reference to the foreign property, it is referring to the purpose of the loan. The fact that it is unsecured means that it does not operate in the same way as a mortgage on a UK property. In other words, if you default, they cannot necessarily go for possession or sale of the overseas property - but this very much depends on the country where the property is and what the relevant local laws happen to be. The fact that you have UK property does, however, mean that if you default in respect of the foreign property, you could be sued in contract in the UK. At that point, any UK assets can be attacked. In its turn, this means that a charging order (operates like a mortgage) can be applied for in respect of the UK property and then an application made for the sale of the UK property. The charging order would, however, rank behind any existing mortgages in the pecking order to get at the proceeds of sale.