International Mortgages – what you need to know
Choosing to buy a property abroad can be a complicated process, though it varies from country to country. As well as finding the perfect property, there may be things like a language barrier to navigate, extra fees and taxes to consider, and a different buying procedure to the UK.
Sorting finances is at the top of the list in order to secure the funds to purchase a new home. International mortgages are, in many ways, exactly the same as taking out a UK mortgage: an amount is agreed with the lender, terms of repayment are laid out and a deposit is required. Also, get a mortgage offer in principle before agreeing to a purchase, and engage the help of a professional with experience in expatriate house buying in the country of choice.
Where to borrow from
It’s possible to get a mortgage for an international property using a service based in the country (which is a good option if buying after relocating and already settled in the country), or through an international subsidiary of a UK bank. For example, HSBC offers banking services, including home buying, through its subsidiaries in Turkey, Malta and France. It is worth speaking to UK banks as part of the relocation process to see if they can offer any help. This can ensure a familiar process, support with documents produced in a different language and English-speaking advisors.
It is worth considering local lenders too, especially after residence has been established and a credit history built up. These can sometimes offer better rates. Find a broker to help sift through the various mortgages available; there are dedicated services for British expatriates looking to buy property abroad. One of these is InternationalMortagages.net, which can help foreign nationals buy in most countries around the world.
Preparation is key
Much like getting a UK mortgage, being prepared in advance is important. The first thing to consider is what costs are involved. There will be a deposit required, which will usually be around 30%, though some countries and lenders may progress with a 20% deposit. Also, consider the mortgage term, which may be restricted by age in some countries. This is where a specialist mortgage advisor and legal expert can help to navigate the local laws and regulations.
Other fees that need to be included including legal fees for paying for brokers, solicitors and lawyers as needed. There are also different tax obligations in different countries, similar to stamp duty or other property taxes. A local bank account will be needed, and in some cases will need to hold a certain amount of funds (such as a few months’ mortgage payments).
Various documents will need to be provided, as well as proof of affordability. A legal expert can go through all of these details and help with the whole process, which is why it’s recommended to take on professional guidance.
If the funds for the deposit will be coming from a UK-based bank or savings account in Sterling to buy a property in a different currency, then the exchange rates could have an impact. These can fluctuate throughout the buying process, but it is possible to register with a currency exchange company so that a rate can be ‘locked in’ in advance, which helps with budgeting.