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When you’ve settled on a location to start searching, or you’ve already found the property of your dreams, you’re probably ready to begin the particulars of buying a property overseas. We’ve spoken about the benefits of owning property abroad, so let’s talk about how to pay for that property. This can feel like a daunting task especially if you’ve never made an overseas purchase or payment like this before, so I wanted to help explain and offer some tips on how to make this process a bit easier for you. <br> <br>
Pick your payment method
Depending on your circumstances you will have a different method of purchasing, and I’ve outlined four different methods below. It’s also important to remember that besides paying for the property itself, there will be upkeep costs involved. You will have taxes and bills, and if you are buying a property in a complex, you may also have additional monthly or annual fees that contribute towards the grounds and staff of the complex.
Whatever your circumstances are, you may have enough cash to purchase a property outright. If you are fortunate enough to have built up cash reserves, then you are ahead of the game in terms of pace and negotiating a price point. <br> <br>
Arrange an overseas mortgage from a UK bank
Some UK banks have offices and licenses overseas and are therefore able to get you an overseas mortgage. It is always best to consult an independent mortgage advisor who specialises in this area, as they will have wide reaching access in terms of market participation and knowledge.
Arrange a mortgage from an overseas bank
You could opt to get a mortgage from an overseas bank, and this also has positives and negatives. It’s important to note that an overseas bank would not be regulated by the FCA, and it’s best to seek out an independent lawyer and translator to protect you from any pitfalls or more importantly fraud.
Remortgaging a UK home
Depending on a multitude of factors about your home, you may qualify for a remortgage, which is essentially borrowing more money against your home. Please note that this can be high risk and you should consult a mortgage advisor. <br> <br>
Plan your FX strategy
Whatever method you use to purchase a property abroad, you’re going to need to consider the foreign exchange (FX) rates. Selecting a payments provider who will not only get you a good rate, but also be trustworthy and easy to contact is crucial to making the transaction flow smoothly for everyone involved.
If you’re paying for the property in full, you want to make sure that your payment is made on time and you have achieved a great rate, so that you don’t end up overpaying for the property.
If you have to sell one property to finance the other or you need to liquidate investments before having cleared funds, the ability to lock a rate early in the process may alleviate some of the burden and could also be highly cost effective, if for example the economic outlook is undesirable (from now until exchange) and the currency movements are beginning to weigh against you.
Being able to fix a rate (in the form of a Forward Contract), enables you to take advantage of the current rate and pay the bulk of the cost before a date in the future. This means that you only need to provide a deposit upfront and the rest can be paid at a much later date (i.e when your property sale takes place or when your investments have matured and the funds are clear.
<br> <br> If you’re making monthly mortgage payments, ideally you will want to set up a regular payment plan so that you benefit from a locked-in rate each month, and your payments are processed automatically, on time, every month <br> <br> Using a specialist payments company such as Caxton could help you drive down costs in all areas. If you’re interested in learning more about us and how I, or a member of my team, could help you out with your property purchase, please do get in touch. <br> <br>
Some other key top tips
- Get key (if not all) documentation translated into your native language. This could add an additional expense, but it means that you are fully clued into what you are signing and purchasing.
- Understand the laws of the country and make sure you know how they will affect you and your purchase. It’s recommended to speak to an independent lawyer.
- Consider getting an independent tradesperson to look at the property and they can let you know of any structural issues, any issues with electrics or plumbing, and any minor issues or cosmetic things worth changing. This is good practice for buying property anywhere, not just abroad. <br> <br>
There are many things to consider when buying a property, but when you’re buying a property abroad that list keeps growing. The UK Government website has a lot of information regarding safety and laws when buying property overseas and it is well worth checking out, and if you’re ever in doubt about any part of the process, speak to an independent professional – it won’t be long before you’ve got your summers (or winters!) abroad in your new place.