Can you get a mortgage for a holiday home abroad?

You can get a mortgage on an overseas property from UK or international mortgage lenders.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
If you’re looking for an overseas home to enjoy your holidays in, you’ll be pleased to hear it’s simple enough to arrange an overseas mortgage.

Most of the processes and eligibility checks are the same as when buying a home in the UK, although you may face a different set of fees and charges. The way you pay your taxes will differ slightly too.

The biggest decision you’ll need to make is whether to use a UK or overseas lender.

There are plenty of UK lenders that are happy to arrange a mortgage on an overseas property, although it’s common to get a better deal using a mortgage provider from the country where you’re buying a home.

Should I use a UK lender or an overseas lender?

If you use a UK mortgage lender to buy an overseas property, the process is likely to be less complicated. You won’t have to pay for documents to be translated and you’ll pay your mortgage in pound sterling, plus your lender will have to follow Financial Conduct Authority (FCA) regulation.

However, it’s common for overseas lenders to offer superior mortgage rates. There will be a bigger selection of overseas lenders to choose from and this extra competition drives rates down. Mortgages from international lenders tend to require a larger deposit though, plus there may be more one-off fees associated with the mortgage.

Overseas lenders don’t have to obey UK regulations either. All UK mortgage providers have to follow rules set by the FCA to ensure you’re treated fairly, plus you can appeal to the Financial Ombudsman Scheme (FOS) if you feel that hasn’t been the case. You won’t have this luxury with overseas lenders, so it’s worth shopping around for a trusted lender.

If you’re paid in pound sterling, it’s worth remembering that its strength compared to the local currency will affect the value of your overseas mortgage.

Pros

  • Overseas lenders tend to offer more-favourable mortgage rates than UK lenders.
  • You’ll gain better advice from individuals with broader knowledge of the local market and local laws.

Cons

  • You’ll usually need a larger deposit.
  • You’ll often need to pay for documents to be translated.
  • Overseas mortgage providers aren’t regulated by the FCA or part of the FOS.
  • Haggling over the mortgage rate is far more commonplace overseas. Unless you have a solid understanding of the local property market and the local language, it’s worth getting a mortgage broker to negotiate a deal for you.

Tax on overseas property

The tax you’ll pay when buying your overseas property will differ depending on the country. Always speak to a local tax expert, as there may be foreign taxes to pay.

You must declare all rental income from your overseas property every year via self-assessment. You’ll pay income tax on it at the same rate as you would in the UK. If you also pay income tax overseas, you can deduct this from your UK tax bill, so you’re not paying twice.

You won’t pay any stamp duty on overseas purchases, although the rules surrounding first-time buyers and second homes will still apply if you go on to buy a property in the UK. That means you’ll no longer qualify for the first-time buyer discount and you’ll have to pay the second-home surcharge unless the overseas property is sold.

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

More guides on Finder

  • Finder Lending Innovation Awards 2022

    These awards recognise innovation in the areas of credit cards, loans, mortgages and BNPL. We reveal this year’s winners.

  • Lending Innovation Awards 2021

    These awards recognise innovation in the areas of credit cards, loans, mortgages and BNPL. We reveal this year’s winners.

  • Agricultural mortgage

    What you need to know about getting a mortgage if you’re buying or refinancing a farm or farmland, including the factors lenders consider when you apply for one.

  • Mortgage for a pub

    Everything you need to know about taking out a mortgage to buy or refinance a pub. Find out where to get one, how to get the best deal and the factors lenders consider.

  • Mortgage for a hotel

    In-depth guide to taking out a commercial mortgage to buy or refinance a hotel. Find out how to get the best rates, factors lenders consider and what you need to apply.

  • Bridging loan vs commercial mortgage

    Find out if a bridging loan or commercial mortgage would suit you if you’re buying or refinancing commercial property and when a bridging loan can be a better option.

  • How much deposit do I need for a commercial mortgage?

    Find out how much deposit you need if you’re taking out a commercial mortgage, including the factors lenders take into account, and how to get the best deal for you.

  • Getting a 5% deposit mortgage under the government’s new guarantee scheme

    Learn more about the new government scheme that allows first-time buyers and home movers to get on the property ladder.

  • Chain break finance

    Learn everything you need to know about chain break finance – a type of bridging loan that stops you losing your dream home if the sale of your existing one falls through.

  • Fix and flip

    Read our in-depth guide to fix and flip and how this type of property investment works, including the factors you need to consider, the risks to be aware of and how to finance it.

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site