How To Finance Your Property Abroad

It’s important to decide how you’re going to finance the

purchase of your property abroad. Although most property

abroad is undoubtedly cheaper than its UK equivalent, it

is still a substantial investment. It makes sense to

investigate the options for financing the purchase so that

you can decide which is the best option for you.

The first thing to note is that UK mortgage companies will not

give you a mortgage on a property abroad. If you need to take

out a mortgage, you have two options:

• Re-mortgage your current property. If you can get a re-mortgage

for all or part of the value of your current home, you may be

able to pay for your property abroad outright. Shop around for

a good deal, because if you can’t keep up the mortgage payments,

your home in the UK could be repossessed.

• Mortgage with a foreign bank. Banks in the country where you

are purchasing your property abroad will give you a mortgage.

If you are buying somewhere that’s popular with overseas owners,

you will be able to find a bank or mortgage broker that can

speak English and talk you through the details. Alternatively,

a mortgage broker, like our mortgage expert, can act as an

intermediary between you and the bank to ensure that you have

the funds to buy your property abroad.

There are other finance options to help you buy your property

abroad. They include:

• Equity release – this is a finance arrangement with a bank or

other finance provider, where they release a certain percentage

of the value of your home in return for a mortgage over that

percentage of your home that has been released. The interest

rates on these types of loans can be higher than traditional

mortgage rates, but they do allow you to release a capital

amount that could be enough to buy your property abroad.

• Joint ownership – buying your property abroad with friends or

family means that you get the property you want with less capital

outlay. If you buy your property this way, you will have to set

down in clear legal terms who owns how much of the property, and

have something in place that covers you if the other party wants

to sell their share.

• Use your pension – if you are in a position to use the tax-

free lump sum portion of your pension then this could be a way

to finance the purchase of your property abroad. Make sure that

you know exactly how much you’re entitled to cash in, and check

the rules of your scheme before you commit to paying for your

property.

• Savings – if you have enough savings built up to finance your

property abroad, then use them. Be aware though, that there is

no guarantee that the price of your property will rise, and that

you or your heirs will get the same amount of money back when

the property is re-sold.

Article written By HolidayHomeNow.