Helping you arrange international finance to purchase your dream home.
Overseas mortgages are for properties outside the UK.
Typical examples of when an overseas mortgage may be required are:
You can arrange an overseas mortgage through a UK bank, international mortgage lenders or a specialist mortgage broker.
It is also common to raise the funds to buy a property abroad outright by remortgaging your UK property.
Remortgaging your UK home can help you raise the funds to buy property abroad outright as opposed to getting an overseas mortgage.
Whether getting a UK Mortgage is a sensible option for you will depend on your personal circumstances - including how much of your existing mortgage you've paid off, is there enough equity in your home, other debts outside of the mortgage and your current credit history - as well as factors such as interest rates at the time you apply.
London FS are able to assist with looking at the different finance and loan options available with you, with experienced mortgage advisers on hand to ensure you get the right advice and best deal when looking at buying a property abroad, whether it is raising the finance on your home in the UK or looking at an international mortgage for your new property.
Some of the main UK high street banks and mortgage lenders, offer international mortgages, but they may be limited to the countries in which they operate and may be also restricted to the type of client they will provide mortgages for buying property abroad.
Banks tend to only provide customers an international mortgage service for purchases in countries where they have offices.
While the overseas mortgage process in established overseas real estate markets such as France or Spain might be simple, it may be trickier if you're looking further afield.
Although the mortgage may be set up through the UK bank, you would deal with the foreign arm of the bank once the mortgage had been arranged.
It is possible to arrange overseas mortgages using a specialist mortgage broker to obtain a international mortgage with an overseas lender.
These brokers also tend to provide additional services and can also give you tailored information, including a list of selected partners such as estate agents or lawyers to use in your chosen country.
Mortgage rates and mortgage options in some areas of the eurozone can be lower compared to UK mortgages, especially in established foreign property markets with a wide range of mortgage providers, so you might get a better deal by borrowing abroad.
However, overseas mortgage brokers are not covered by the Financial Conduct Authority, so you would struggle to get any compensation if you were given poor advice. You should also consider the repercussions of borrowing in a foreign currency. If you do so, exchange rate fluctuations will affect the monthly repayments on your mortgage.
The deposit needed for an overseas mortgage tends to be higher than you would need for a standard UK mortgage, In Spain, it's common for overseas buyers to pay 30%-40% of the property price as a deposit.
In some countries the deposit is non-refundable, so don't hand over any money before you've negotiated an initial contract, and then only to a lawyer or bonded estate agent.
When making an overseas property purchase, it is likely you'll need to pay in the local currency. Though many UK bank accounts allow you to make payments in currencies other than sterling, most of them will charge high conversion fees, which will add up quickly when you're spending a large amount.
Even if they don't charge these fees, their exchange rates are unlikely to be good. To avoid this, it's best to use a specialist currency broker who can offer you lower fees, and an exchange rate closer to the 'bank rate' - which is the best rate available. Among these specialists are TransferWise and Caxton FX. You can save more money by choosing to convert when the exchange rate is favourable to the pound.
If you've bought a uk property before, you'll know there are a number of legal requirements you have to satisfy.
Buying abroad is no different. In fact, since foreign countries have laws you may not be familiar with, it's imperative that you pay even closer attention to your legal responsibilities and the paperwork.
Every country's system has its quirks, but some are quirkier than others. In some countries, you will have to use a notary - an impartial government representative - to oversee overseas property transactions.
Some places, including certain areas of Spain and the Canary Islands, require you to have a licence if you want to rent your property out.
Many nations have rules preventing foreigners from buying real estate, or restricting how much land they can own. To make sure your purchase is legal, it’s essential to employ an independent lawyer, with no connection to a developer or agent, who is fluent in both your own and the local language.
They should have an in-depth understanding of property law in that country, including how it relates to non-residents and what legal protections you have. It makes sense to hire someone based in the country you're buying in, as much of the work will be done there.
Since your tax obligations will differ from country to country, it's important to seek legal advice to find out exactly what you'll have to pay.
If you're letting the property out, you will have to pay tax on rental income. In most cases, you'll need to declare this income for tax purposes abroad and in the UK.
International agreements known as double-taxation treaties currently exist to ensure that you don't pay the same tax twice . You will have to pay capital gains tax when you sell the property if it’s not your main home, though again the current agreements mean you can claim relief if you pay this twice in some circumstances.
Inheritance tax could be payable by your heirs when you die, but double-taxation treaties could make a difference here, too. You might also be liable for the local equivalent of council tax.
If you have decided to emigrate, you should research your tax, pension and healthcare requirements as early as possible.
If you're moving to a country outside the EU, you'll need to look into the rules it has for foreign residents. In many cases, you will have to apply for a visa before you can move.
You can make money by letting your holiday home out when you're not using it, but it's important to factor in the time and costs involved.
If the property you're considering buying is already rented out for some or all of the year, ask the current owner about yields and how many weeks a year it's typically occupied to give you an idea of the returns you can expect.
If it's not currently let out, research how much it costs to stay in similar local properties. Don't forget to factor in the costs of maintaining and cleaning the property between guests, and the time you'll need to spend advertising the property, managing bookings and communicating with guests.
Of course, you can choose to pay someone to handle this instead. A full property management service could cost around 20% of your gross rental income. If your primary motivation for buying overseas is investment, don't get sucked in by claims of huge capital growth and rental yields. As with any investment, it is possible to lose money.
There's still spending to be done once your overseas property purchase has gone through. It's important to factor ongoing costs into your budget.
If you're emigrating, think about the local cost of living, as well as utility bills, insurance and general maintenance.
If you're letting the property out, there are still maintenance and insurance costs to think about, plus potential agent costs and your mortgage repayments.
Moving abroad, or even paying the bills on a rental property, will require you to spend foreign cash.
This isn't as much of an issue if you're earning money or receiving a pension in the local currency. But you have two main options if you're not:
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