Tips for taking out an overseas mortgage
If you’re considering an overseas mortgage to finance your property purchase, here are some hints and tips from Conti, the overseas mortgage specialist, to help ensure that your experience is as hassle-free as possible.
10 tips to get you started
Obtain an Approval in Principle. This will tell you exactly how much you can borrow and what price range you can afford. It’s tangible evidence you can take along when house hunting and could make it easier to secure a property. What’s more, it costs nothing.
Consider exchange rate fluctuations. It’s generally advisable that an overseas mortgage and the income used to service the mortgage repayments are in the same currency, thus avoiding issues with exchange rate fluctuations. Even small changes can make a big difference to your purchase price, your monthly mortgage payments or future rental income.
Never sign a contract that you don’t understand. If both English and foreign language versions are provided, ask your solicitor to confirm the latter is a true translation. And always read the contract. Ensure you are fully conversant with the terms and conditions you’re about to agree to.
Open a bank account in your chosen country. from which your mortgage payments can be debited. And where relevant, ensure you obtain a Certificate of Importation for the money you bring in from your home country. Set up standing orders in your local bank account to meet local bills and taxes.
Factor in additional costs. Bear in mind that bills don’t end at the asking price. Lawyer's fees, local and national taxes and insurance can often add at least a further 10 per cent to your cost of acquisition. Ensure you are, therefore, aware of the costs charged by the local authorities for purchasing a property in your chosen location.
Check out your tax position. For example, owning a French property means your estate will be subject to French inheritance tax. As such, if you have children, they’ll automatically inherit rights to your house and your estate may not automatically pass to your spouse. You may, therefore, need to compile a separate will.
Take legal advice. Seek specialist counsel from an independent English-speaking solicitor who is not connected to your seller, estate agent or developer. If required, you can also consult valuers, surveyors or architects. They should be proficient in the laws and processes of your chosen country and also know the specifics involved in buying a property there.
Arrange a valuation. Before you proceed with the purchase, ensure an independent valuation of the property is carried out, which should point out any problems with the property - e.g. subsidence, damp, wiring defects. If you’re arranging a mortgage, this should be arranged by the lender as part of its own checks on the property.
Title/Property Ownership. Does the developer or seller have full title to the land or property? Ensure you do not inherit a debt on the property before you purchase, which your solicitor should also be able to check.
Don’t let your heart rule your head. It’s crucial that the right advice is sought and that you don’t try to cut corners. The principles you would stick to in the UK also apply when buying overseas.
Working directly with overseas lenders and property experts in more than 45 countries, Conti Mortgages Overseas can secure you the widest choice of mortgages. You can be safe in the knowledge that their experienced mortgage advisors will find you the deal that works best for you. See how Conti Mortgages Overseas can help you.