Mortgages Abroad and Finance
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Montana Roja Real Estate believe that purchasing an overseas property should not be a harrowing experience. We endeavour to ensure that all our clients are fully informed as to the processes that need to be adhered through in order to obtain their dream home in the sun, including obtaining an overseas mortgage if necessary. Of course as we all know, a mortgage is a sum of money borrowed from a bank or building society for the purpose of buying a property which is then paid back over an agreed period of time (usually no less than 5 years). We have therefore put together some advice on obtaining a mortgage abroad.
There are many reasons in choosing to purchase an overseas property. These typically revolve around the purchase of a holiday home or the acquisition of investment property abroad. When it comes to financing such a home purchase, there are two basic ways to get a mortgage abroad.
Firstly there is the option of a Foreign Property Mortgage which allows you to take out a mortgage on the foreign property itself. This can be from a UK mortgage provider or from a lender based in the same country as the property you are wishing to purchase.
Another option is to remortgage an existing UK property, therefore freeing equity to fund the purchase for your overseas property.
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There are many different ways of taking out a mortgage when purchasing abroad. The types of mortgage you will be offered will vary from country to country, however there are three main types:
Repayment mortgages
A repayment mortgage works on the principal that each month you pay off an agreed portion of the original loan, plus the interest accrued. At the end of the mortgage’s life span you will own 100% of the property, although the monthly repayment can sometimes be quite high.
Interest only mortgages
As the name suggests with this plan you pay only the interest but these mortgages are usually only considered when they are taken out in conjunction with another repayment plan such as endowment policies, ISA’s or pension plans.
Flexible Mortgages
Some banks may give you the option of taking out a Flexible Mortgage. This way the lender gives you the option of paying more than the agreed monthly amount into your mortgage when you can afford to do so or skip payments if you are in short term financial difficulty. Flexible mortgages are usually available on repayment mortgage packages.
A mortgage abroad is in many ways similar to a mortgage you would take out for purchasing a UK property; however, there may be different taxation levels, fees or restrictions to consider when purchasing abroad.
These rules can vary drastically from country to country, therefore, Montaña Roja Real Estate have broken down our overseas property to provide information on the various facets of property purchase in the different countries we have property for sale in.
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