Properties overseas – foreign property mortgages from UK lenders
When you see the overseas property for sale that is right for you, hopefully you have the funding in place to secure it as quickly, and as cheaply, as possible. If you require financing to make the purchase you should have it in place before you start looking at properties overseas. You must also decide whether to take a mortgage for overseas property from a UK or international bank.
A UK mortgage for overseas property
You cannot get a direct mortgage on overseas properties from the UK as banks only lend money against property in the same country. This means you would need to remortgage your main home to buy overseas property for sale.
This kind of UK mortgage for overseas property is obviously attractive to those who have built up substantial equity in their main home and want to take advantage of this. At the same time, it puts your main home at risk if you default on the increased payments.
Other advantages to buying properties overseas in this way include:
No legal or Land Registry fees if you already have a UK mortgage and obtain a further advance.
You may be able to negotiate a cheaper borrowing rate with your bank.There is a more comprehensive range of mortgage products and greater flexibility.You may be able to raise more money than through a mortgage for overseas property from an international lender.
No risk from currency fluctuation when taking a mortgage for overseas property from a UK lender.
UK banks abroad offering mortgages for overseas property
A number of UK banks have branches and subsidiaries overseas. This has allowed them to introduce greater flexibility and choice to the market for properties overseas. In many places (particularly Europe) interest rates are lower so it is doubly beneficial for those buying overseas property for sale. Loans are secured on properties overseas and your UK assets will be safe.
Mortgages for overseas property through international lenders
This typically means incurring higher set up costs although in many cases this will be offset by lower interest rates. You will normally be able to generate a higher percentage of the value of the overseas property for sale through a UK lender. Overseas banks will not normally lend past around 85% of the value of properties overseas.
There are a great many other advantages and disadvantages to taking an overseas mortgage when buying properties overseas. It is recommended that you start the mortgage process well before looking at overseas property for sale. Think carefully about whether a UK or international lender offers you the best mortgage for overseas property.
