A complete, simple guide to buying property overseas

Learn how to go about getting a mortgage for a property overseas.

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Looking to move or invest abroad? Use our invaluable guide to better understand how to go about getting a mortgage for a property overseas.

We know that getting a mortgage for a UK property can be confusing – let alone a mortgage for a property overseas.

Whether you’re looking to move abroad or have decided you would like to buy to let, this guide is aimed at making the process a whole lot easier to understand.

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What is the process for buying property overseas?

1. Choose a location

You can buy property in countries all around the world, but the best places to purchase a home will vary according to a range of factors. These include the performance of the Pound versus the local currency, housing prices, and the laws and regulations surrounding foreign investment in property in certain countries.

2. Research local customs

The process of buying a property overseas will vary depending on the country in which you are purchasing. Each country has its own laws and regulations regarding foreign residents buying property, so you’ll need to abide by those.

3. Choose a lender

If you require some financial assistance to purchase your chosen property, you can borrow money in the form of a mortgage. It is important that you research and compare mortgage lenders to make sure you end up with the right mortgage for you.

4. Prepare you money

Regardless of where you’re buying property, you’ll obviously need to transfer money overseas to fund your purchase. The first option many people think of to send money abroad is to go to their bank. Your bank is a good place to start — but only to provide you with a benchmark of how much it will cost you to transfer funds abroad, there are other money transfer services that could save you money.

For more information on sending money abroad, visit our international money transfers page.

How can I finance an overseas property?

You can’t use a standard UK mortgage to fund your overseas property, you will require a specific mortgage from a bank or building society that supports your chosen country. Some mortgage lenders may only support certain countries.

It is worth seeking the advice of your lender or a specialist broker about buying overseas property. They may also be able to advise you on the right location for your property.

The mortgage market is extremely competitive at the moment which works out in favour of the customer as it means there are loads of mortgage options to choose from. It is important to shop around when hunting for the right solution for your borrowing needs.

Another issue to consider is that you’ll be exposing yourself to foreign exchange risk, so finding the most affordable way to transfer money overseas is essential. It’s also a good idea to make sure you won’t be exceeding any foreign exchange controls in the country where you are making your purchase.

Can I remortgage to buy a property overseas?

If you already own a property in the UK and it is possible for you to remortgage on your property, this could be a way of providing you with some equity for a deposit on an overseas property.

For more information on remortgaging, visit our remortgaging guide.

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6 matters to consider when purchasing property overseas

  • Select the right property. Investing in a property overseas is an opportunity to achieving a profitable income, so selecting a property that is in the right location and also buying at the right price are important decisions.
  • Research the market. Conduct research into the area to understand market factors such as price growth, rental yield, vacancy rates and days on market (DOM) to help you decide whether or not it is a good investment area. It’s also a good idea to speak with professionals such as local mortgage brokers, real estate agents, accountants and financial planners to help you decide whether the property will suit your investment strategy.
  • Consider using a property manager. A property manager is a good asset for many property investors. Not only will the property manager be able to give you advice about your responsibilities as a landlord, but they can also organise maintenance and repair issues, and help you find the right tenant by conducting reference checks and ensuring that the tenant pays rent in full and on time. They may also act as a mediator in the event that you have a dispute with your tenant.
  • Find the right mortgage. Finding the right mortgage and structuring your loan correctly is vital for the success of your investment strategy, and this should be done with the help of an experienced financial adviser and a mortgage broker. You’ll need to decide whether the flexibility of variable rate or the certainty of fixed rate will suit you better. It’s also worth carefully considering the features that will be most beneficial for your mortgage, such as an offset account which can help you reduce the amount of interest payable over the life of the loan.
  • Appeal to tenants. You’ll attract better quality tenants if you present the property in good condition. Consider boosting the sell-ability of your property in order to appeal to both tenants as well as future buyers.
  • Understanding maintenance costs. It is important to be aware that a buy to let property abroad will require regular maintenance to make it attractive for tenants and this can be costly. You might also want to factor in the cost of regular cleaning and renovation projects.

For more information on buy to let mortgages, visit our buy to let guide.

How could the exchange rate affect my mortgage?

The exchange rate you can get when buying a property abroad is crucial, as it effectively determines how much buying power you have in an overseas market. That is why you should’t rush into buying a property if you have the time to wait to get a better rate. The exchange rate will also have an impact when transferring money overseas. It makes sense to shop around and compare the exchange rates between different money transfer providers. Even a difference of a cent or two in the exchange rate can make a huge difference to the amount of money that arrives to your recipient, especially when you’re dealing in large transfers — as is usually the case when buying property.

What additional costs should I consider?

  • Tax. You will need to inform the tax authorities that you’re leaving the UK or that you have a property abroad that provides you with an income. UK citizens are required to pay income tax on income from overseas properties and you may also be required to pay local taxes as well.
  • Void periods. You should prepare for the fact that there may be periods when you will have no tenants and therefore no income. This is particularly likely if you have chosen to purchase a property in a location thats popularity is dependent on the season.
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