A Quick Gide to Getting an Overseas Mortgage

Find out how to finance a real estate purchase abroad, from taking out a mortgage abroad to remortgaging a property in the UK to free funds.

What is a “foreign” mortgage?

A mortgage abroad is a mortgage for a home that is not in the UK. You consider taking out a mortgage abroad if you are buying a vacation home, retiring to sunnier climates or – a growing trend – buying your first home abroad because you cannot afford to buy in the United Kingdom. You can organise a mortgage abroad through a UK bank or an international lender. It is also common to raise money to buy a home abroad directly by reclaiming your home in the UK. Here we explain the pros and cons of each option.

Re-mortgaging your home in the UK to purchase a property abroad

Re-mortgaging your home in the UK can help you raise the money to directly buy a home abroad. If this is a wise option for you, it will depend on your personal circumstances – including the amount of your current mortgage that you have paid and your existing creditworthiness – as well as factors such as interest at the time you apply.

Borrowing from a British bank to purchase property abroad

Some of the major UK banks have an international mortgage service, but you will need to know in which countries they work. Banks tend to only purchase mortgages in countries where they have offices. While getting a mortgage in real estate markets located abroad such as France or Spain can be easy, it can be more complicated if you look further. Although the mortgage can be established through the UK bank, you would deal with the foreign branch of the bank once the mortgage was established. You can read more about getting a mortgage in Spain at Valuvillas.com.

Organising a mortgage abroad

It is possible to coordinate a mortgage with a foreign lender with the help of a specialized broker. These brokers can provide you with personalized information, including a list of brokers or lawyers to use in the chosen country. Mortgage rates are much lower in some parts of Europe than in the UK, especially in well-known real estate markets with a wide array of mortgage lenders, so you could get a better deal by borrowing overseas. However, foreign mortgage brokers are not covered by the Financial Conduct Authority, so you might have trouble getting a fee if you gave bad advice. You must also take into account the consequences of borrowing in a foreign currency. If you do that, currency fluctuations will impinge on your repayments.

Deposits in foreign property

The deposit required for a mortgage abroad tends to be greater than you would need for a typical UK mortgage. In Spain, it is commonplace for foreign buyers to pay between 30% and 40% of the price of the house as a down payment. In some countries, the deposit is not refunded, so do not deliver without money for the negotiation of a first contract, and then only to a lawyer or broker.