An assessment of the types of international property mortgage available

 

There are three main groups of people that look to take out an international property mortgage. This includes those looking to live abroad, borrowers wishing to purchase a second home (abroad) and expatriates that are looking to move back to the UK.
There are several options open to anyone who fits into one of the above categories and it is important to make the right choice when it comes to choosing your mortgage for this purpose. This article assesses the various different types of international mortgage financing available for the first two categories of people.   

International mortgage provider
This type of mortgage can be obtained from an international mortgages lender in the UK, with several banks offering good deals for particular countries. For example, HSBC are a good choice if you are looking to buy in France, and Lloyds offer an attractive option for those wanting to purchase property in Spain.
Advantages of this kind of mortgage include the expert advice you receive from financial specialists, and as the procedure involved is similar to that of getting a domestic mortgage, it can prove to be the least stressful of the options.
You may, however, need to watch out for higher fees. Other disadvantages are that the borrower often has to already be a homeowner in the UK before applying for an international property mortgage, you can usually only obtain a mortgage of up to 70% of the purchase price, and the mortgage is secured on the overseas property.

Local overseas lender
Another option available is to obtain the mortgage locally in the country in which you wish to buy. There are several advantages and disadvantages to this type of mortgage. Some of the larger UK banks have subsidiary branches in other countries, so it is worth checking if there is one in the particular country you are interested in. There are also several countries that have close ties to the UK, which facilitates the transfer of necessary information such as your credit history. It is always a good idea to compare the interest rates with those offered by an international mortgage broker back in your own country before making any decision. Another advantage of a local lender is that you should receive an accurate assessment of the value of the property, with thorough checks being undertaken on the property and developer. However, disadvantages include the possibility of higher lender fees and interest rates abroad and a smaller loan to value ratio. The process may also be more complex than with an international mortgages lender.

Second home
There are those of you who will be looking to buy a second home and are interested in international property investments for this purpose. This is quite a popular form of equity release, with many homeowners opting to remortgage their property in the UK in order to purchase overseas. This is due to the strengthening of the UK property market, resulting in homeowners building up extra equity in their home. Advantages of this method are the possibility of lower rates in the UK than abroad, the mortgage is secured on your home in the UK, and the process is less complicated and a quicker way to buy property abroad than some methods. The main disadvantage is the increase in the size of your mortgage and subsequent interest it incurs, along with your repayments. This results in some borrowers paying off their mortgage into retirement.

Conclusion
The three most common types of international property mortgage, as outlined above, are to use an international mortgages lender, an overseas lender local to the country you wish to buy in, or to remortgage and visit a lender that deals specifically with homeowners in the UK looking to buy a second home, abroad. Each of the processes has its advantages and disadvantages, thus it is worth considering all of these carefully and researching your options further, in order to come to an informed decision. Choosing the right mortgage to buy your property abroad, whether you are looking for a second home or wishing to move completely out of the UK, is an important decision to make. Compare the options laid out in this article, seek further advice from specialists, and enjoy your new property abroad!

The views in this article represent those of the authors and not those of Speaking Mortgages. This article does not represent financial advice and is purely editorial supplied by third party's. If there is information within this article which you wish to rely on then please check those details with relevant financial or other professionals prior to making any important decisions.