How To Mortgage Overseas Property?

mortgaging overseas property

You will get an overseas mortgage if you want to purchase a property that isn’t in the UK. They can be used to purchase a vacation home, a retirement home, or if you can’t afford to buy a home in the UK. An overseas mortgage can be used to buy property abroad as a buy-to-let investment or a permanent residence if you can’t afford to buy in the UK..

Is It Possible To Get A Mortgage For A Property In Another Country?

If you meet their requirements, there are specialist mortgage lenders in the UK and around the world who provide foreign financing for property abroad. If you want to buy a property in another world, mortgage lenders can be more careful, so while you may find a lender and an overseas mortgage, it can take a little longer.

Some countries will require a larger deposit, and each lender may have different conditions, which means that while one lender may refuse you, another may accept you.

How To Obtain An Overseas Mortgage For A Property?

HOW TO get an overseas mortgage

Look for a global broker.

Check with one of the international mortgage specialists we work with who has arranged and handled international mortgages before to prevent any unwanted rejections on your credit sheet.

A professional broker will:

  • Find the best interest rates on the market.
  • Negotiate the terms of the contract on your behalf.
  • Take care of any paperwork.
  • If required, arrange for translations.
  • Before you sign any contracts, double-check them.
  • Check to see if you’re worthy.

Concerning the amount of your loan, foreign mortgage lenders put a greater emphasis on your wages. Unlike in the United Kingdom, some foreign mortgage lenders have limits on how much debt an individual may have when applying for a loan. For example, in some jurisdictions, such as Malta, your total debts, including potential repayments, cannot exceed 35% of your total income. Many people apply to lenders without first deciding their eligibility, resulting in both wasted money in application fees and credit file rejections.

Prepare The Paperwork Ahead of Time

preparing your mortgage application paperwork

Overseas lenders can request the following details to process your international mortgage application:

  • A passport, driver’s license, or another form of photo identification is required.
  • Address proof is needed.
  • Income proof is required.
  • You will also need the following if you are self-employed:
  • Your most recent audited financial statements.
  • Personal and company bank accounts for the past six to twelve months.

You can obtain an agreement in principle once you’ve been accepted for a foreign mortgage. If you have this, you can begin looking at local properties and get a sense of which area is best for you.

What Is The Maximum Amount You Could Borrow?

Overseas banks favour repayment mortgages over interest-only loans, with contract periods of 20-25 years, equivalent to those in the United Kingdom. The amount you may borrow for an overseas property depends on the region, the lender you select, and, most importantly, your personal circumstances. The average loan to value (LTV) is about 75%, but this varies depending on the factors listed above.

Tips for Buying Land in Another Country

buying plots of land abroad

When it comes to land, each nation has its own set of laws, taxes, and procedures, not to mention a different language. When you’re an international buyer, this can be overwhelming.

Check the property laws in The Local Area.

Property laws vary widely across the world, and failure to follow them can result in severe fines and even legal action. Non-natives cannot buy property in military prohibited zones or security zones in Turkey, for example. Landlords in Sweden are not allowed to request rental deposits. Also, if a landlord chooses to raise the rent, the tenant can file a complaint with the Swedish Rent Tribunal. Because of the variations in rules, you must deal with a solicitor who is a member of the Law Society of the United Kingdom. They should also have experience with foreign transactions and real estate conveyancing.

Consider the tax implications.

Missed payments and fines will add up quickly if you make a mistake or forget how much tax or what tax you’re supposed to pay. It’s also crucial to comprehend how purchasing a foreign property affects the amount of tax you pay in both the UK and the country you’re purchasing in. As a result, you can work with a professional advisor who is familiar with the tax criteria in the country where you’re buying and has a track record of managing foreign mortgages.

Look into how to obtain planning permission.

The form of planning permission or license you’ll need to make improvements to your home will be decided by the work you’re planning. In most countries, formal approval is required for all new construction work, whether it is to an existing structure or a completely new one. Also, minor exterior repairs, such as new windows or doorways, are needed in countries like Spain and France. Any work done without the proper permits could result in heavy penalties or prosecution, so always double-check with your lawyer, who will go through your paperwork with you. When looking at land, you can check to see what potential development plans the local authority has in place. In certain nations, if a section of your property must be relocated or destroyed to make room for a road, for example, you have no right to appeal and may even be responsible for the costs.

How to Get a Mortgage in Another Country

getting a mortgage abroad

There are a range of mortgage options available to foreign buyers, some of which might be appropriate for you. There are some of them:

Getting a mortgage from an international lender.

Using a mortgage lender based in the United Kingdom.

Raise money by selling a property you already own and buying a new one for cash.

Mortgage lenders from around the world

Since foreign lenders may not have access to your UK credit file, it will take them longer to decide if you have bad credit and pose a risk to them. Depending on the country and its rules, an overseas lender can also request a bigger, non-refundable deposit for your mortgage. As a result, before you hand over any money, have your broker thoroughly review your paperwork and contract.

Getting a mortgage in the UK to purchase a house in another country

Most high-street banks in the United Kingdom sell mortgages for homes in other countries. For applicants who do not know the native language, this may be beneficial. For example, Santander has a sizable presence in Spain. Not only can this help you prevent document translation problems, but it will also save you money on translation fees. Buying foreign property via a UK bank, on the other hand, could prove to be more costly. Furthermore, mortgage lenders in the United Kingdom can (in some cases) lack market knowledge of the local market. This can lead to erroneous valuations and, as a result, lower loan-to-value (LTV) yields.

Remortgaging to purchase a home in another country

You may consider remortgaging a home you already own to collect the funds required to buy an overseas property. The more equity you have in your home, the more you can borrow. Some buyers use their current property’s equity to put down a greater deposit on their overseas property, while others have enough equity to purchase the second property outright. This is a risky decision that should only be considered if you’re confident in your ability to handle both your remortgage payments and the maintenance of your new home. Seek financial advice before continuing with a second mortgage in a foreign country. A mortgage broker will determine your affordability and then shop the market for the best remortgaging offers for you.

Is it possible to remortgage a property abroad?

Some homeowners opt to remortgage their current overseas property to buy a second property abroad after living there for a while and developing roots. However, in some countries, remortgaging an overseas property can be more difficult since these types of mortgage items, such as equity release, are less common. Remortgage products are seen as riskier by many lenders, who tend to stick to conventional repayment mortgages. However, in the right circumstances, remortgaging an overseas property could be feasible, as some lenders are more likely to provide this as a funding alternative.

Is it possible to get a buy-to-let mortgage for a property in another country?

Mortgages for buy-to-let properties can be more difficult to come by because lenders consider the probability of default to be much higher. However, under the right situations, there might be lenders who would consider lending. Others may require larger deposits of up to 40%, while others may require that your income be adequate to allow you to afford your Spanish BTL mortgage without rental income if you are unable to find tenants.

Frequently Asked Questions about Overseas Mortgages

faqs about mortgages abroad

Can older borrowers get a mortgage to buy a vacation home in another country?

The maximum age at which a person can receive a mortgage varies by region. Some lenders want to ensure that the borrower can afford monthly repayments despite living on a pension or using retirement funds. To determine affordability, most lenders may request evidence of income, whether it comes from a pension, savings, or government benefits. Some lenders specialise in mortgages for retirees or older borrowers, and you will find that they provide better interest rates and conditions.

What happens to my mortgage if I migrate to another country?

If you have a mortgaged property in the United Kingdom but plan to relocate abroad, you must also pay your mortgage on time and in full. Although you’ll no longer live in the UK, the terms and conditions of your mortgage remain legally binding. Some homeowners opt to rent out their UK homes while they are away, which can be a perfect way to supplement your income while still making payments. You must register with the Non-resident Landlord Scheme if you wish to do so.

Is it possible to get a commercial mortgage for a property in another country?

Many expats purchase commercial property in other countries to open bars, restaurants, or shops. While commercial mortgages may be more difficult to obtain as a foreigner in certain countries, international mortgage companies may be able to provide you with reasonable interest rates. Check ahead of time to see if the company has any undisclosed debts or pending legal proceedings. It’s also a good idea to open a bank account in the country where you’ll be buying your international commercial property. This makes it easier to keep your business and personal accounts separate, particularly when it comes to paying wages or bills. For more information on this topic, see our guide to commercial mortgages.

Using A mortgage calculator?

While online mortgage calculators, which can be found on several financial websites, can provide a fast estimate, they can’t account for all of the variables that could affect your mortgage. This is because a calculator does not account for the fact that each lender evaluates a borrower differently. Many people are left perplexed or discouraged as a result of receiving an incorrect quote; however, here is a good mortgage calculator to use as an estimator.

Specialist Mortgage Brokers

We recognise that having a mortgage for a property abroad can be difficult, but it doesn’t have to be with the aid of one of the specialist mortgage brokers we work with. Incorrect information will cost you money and, in some cases, cause your application to be denied. We thoroughly vet every broker before agreeing to work with them to avoid misinformation. They must not only be trustworthy and professional brokers, but they must also be OMA certified.

Mortgage Rates In Other Countries.

It can take a long time to study and compare the latest international mortgage rates. Our advisors will take care of this for you. They have access to hundreds of local overseas mortgage lenders and UK lenders and have effectively assisted customers in obtaining the best deals on international products such as…

HSBC: Has a global network and specialises in real estate in Canada, the United States, and Hong Kong.

Santander: They specialise in mortgages for Spanish properties, and our advisors have been able to secure broker-exclusive deals with them.

Barclays: Overseas mortgages are open to Barclays International Banking customers who wish to borrow £500,000 or more and deposit and hold at least £25,000 sterling (or the equivalent in foreign currencies) through their accounts.

Natwest: For Jersey, Guernsey, Gibraltar, and the Isle of Man, Natwest International provides mortgages.

Halifax: Halifax does not lend globally, but Lloyds (part of the same group) does – for more information, see below.

Lloyds: Is a global leader with offices in the United States, Canada, Hong Kong, Australia, and Singapore.

Skipton is a lender headquartered in the Channel Islands that specialises in expat financing.

And there are plenty more.

Disclaimer

This article’s information is correct as of the most recent time of writing, based on our findings. Lender conditions and policies change regularly, so check with one of our advisors for the most up-to-date details. The material on the web does not constitute financial advice because it is not personalised to each particular reader.

The FCA does not control all forms of buy-to-let mortgages. Before securing other debts against your home, think twice. Since a mortgage is secured against your house, it will be repossessed if you default on your payments.

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