Overseas mortgages guide – Rates, lenders and everything you need to know about getting a mortgage outside of the UK
Are you thinking about buying a property overseas? The mortgage process can be challenging at the best of times, so it’s important to know about overseas mortgages before making the first step.
Whether it’s a holiday home or a permanent move, we’ll talk you through everything there is to know about the overseas property, so you can confidently leave your home country and move abroad.
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Overseas Mortgage: What Is It?
You’ll need an overseas mortgage if you want to purchase a property overseas. Some people choose an overseas property because they can’t afford to buy a home in the UK.
Many overseas mortgages are available depending on your purpose for purchase, such as a buy-to-let, investment property, or permanent living.
How Easy Is It To Get An Overseas Mortgage?
Getting an overseas mortgage can be much longer than a regular mortgage for a UK home, depending on where you wish to live. There will be certain criteria that you have to meet before a mortgage lender can offer you finance. These include affordability, age, credit history, employment, etc.
If all of that checks out, the process can be simple, straightforward, and painless. But that’s not always the case, as it can take longer for a mortgage lender to accept your application.
It’s common for an overseas lender to be cautious about buying a property, so don’t worry if a lender rejects you, as the eligibility criteria will differ from place to place, and you may still be accepted elsewhere.
How Much Can You Borrow For An Overseas Mortgage?
Your loan will depend on several factors, and the best way to find this out is to use our online mortgage calculator. The results are an estimate from the information you provide.
We can match you with the perfect lender who can accurately calculate how much money you can borrow for an overseas mortgage and how much your monthly payments will be.
What Overseas Mortgage Options Are Available?
International mortgage providers
Using an overseas lender like a foreign bank can be beneficial when it comes to understanding local laws, international banking, and tax fees. However, it can take an overseas lender longer to process your application as they don’t have your UK credit file to determine your credit.
Depending on where you live, having an overseas mortgage lender could pay a larger non-refundable deposit. We recommend using a UK broker to read through your contract before making any overseas payment.
UK lenders
Many UK banks can provide you with a UK mortgage for your overseas property. Although this can help those who can’t speak the language in their chosen country, you could spend extra money with UK bank accounts. They understandably have a minimal understanding of the local laws, so the prices a UK bank gives you may be inaccurate.
Remortgaging your current property
If you already own a property in the UK, remortgaging it can help you gather the money to buy your new property overseas. Suppose you have enough equity on your UK property.
In that case, you can either use it to put down a deposit on your new property (as an overseas property deposit is usually much more expensive than a UK deposit) or buy the property outright.
Even though remortgaging your home sounds like a great option, it can be risky. We recommend seeking mortgage advice from a specialist broker to determine your property price, whether you can afford monthly repayments, and dig out the best deals.
What Are The Steps To Getting An Overseas Mortgage For Your Property?
Step 1: Find lenders
If you use a UK lender like LoanCorp, we can match you with an international specialist broker with experience helping others buy an overseas property. They can manage the paperwork, read through contracts with a fine-tooth comb, help with translations, find the best interest rates and implement strong negotiation tactics to find the best deal possible.
Step 2: Confirm Eligibility
Do you have any other debts unsettled? Unfortunately, some mortgage lenders may reject your application if you have debts outstanding. Overseas lenders also heavily focus on your finance rather than your ability to put down a deposit.
LoanCorp can confirm eligibility before you spend unnecessary money.
Step 3: Prepare for your application
Make sure to have your passport or other identification, proof of income, and proof of address at hand. Finding the right documents beforehand will help speed up the process.
Step 4: Choose your new home
Now the fun starts! Once you receive your agreement in principle, you can begin house shopping.
Questions To Ask Yourself Before You Buy a Property Overseas
Leaving your UK home isn’t as smooth sailing as flying away for a holiday. Other countries have different rules and regulations. Here are some things you need to think about:
Have you learned the local laws?
First, you must seek advice from a registered solicitor who can help you understand your chosen country’s laws. Before buying your overseas property, you want to ensure that you obey the laws and regulations to avoid legal action.
Do you understand your tax expenses?
Next, you want to find a specialist advisor with experience and knowledge of your desired destination. Failure to understand your tax payments may result in missed charges and extra fees.
Your specialist advisor will also inform you on how much tax you’ll be paying in the UK and your new country.
Do you know how to find a property?
There are many ways to look for property overseas; for the most part, it can be a fun and exciting process. Here are some of the routes you can take:
Overseas real estate agents
The first thing you should know about agencies overseas is that they work with the property seller. However, suppose you’re in your designated area. In that case, you can visit local agents and see what’s available, what the market’s like, how exchange rate fluctuations play out, and hopefully, find your dream overseas property.
UK estate agents
Although based in the UK, one can browse for homes overseas. The best websites and apps to look at are:
exhibitions
This is the least popular way to buy a home overseas, but that’s mainly due to personal preference. Property shows allow developers to mingle with buyers and potentially sell their homes.
The risk of this option is the developer’s plans falling through. So you’ll still want to seek professional advice to read through your paperwork and authorize your contract.
Can you afford the deposit?
The mortgage deposit is usually 5% of your UK property price when purchasing a UK home. However, in some instances, the deposit needed for property overseas, depending on the country of choice, maybe up to 40% of the property cost.
Another thing to note is that some deposits are non-refundable, which is why it’s so important to have an expert who can help negotiate the contract and prevent you from paying any fees.
Do you need authorization for construction?
It’s not uncommon for people to move into their new homes and realize that there are some changes they want to make. Whether that be building an extension, knocking down a wall, or small repairs such as replacing windows, it could require a license, depending on the country you live in.
In most countries, if you’re planning to do any major work, you need to get a permit from your local authority. This is usually called a Building Permit or Construction Permit. In some cases, this may also include permits for electrical works, plumbing, etc.
If you don’t have one of these permits, you may have to pay a fee to cover inspection costs. It’s important to remember that if you fail to obtain a permit, you could end up facing hefty fines.
What Documentation Is Required To Apply For An Overseas Mortgage?
The documentation needed for an overseas mortgage will differ in each country. Other personal circumstances may require other documents, but the most common documentation you need for your application are:
- Your passport or another form of ID
- Your existing mortgage payment schedule
- Proof of employment
- Proof of address
- Bank statements revealing your spending
Depending on where you reside, you may need to provide other documents. We can provide you with a lender to help you find exactly what you need.
The Most Popular Countries UK Residents Move To
Most UK residents love to move to a hotter country, which is no surprise due to the unpredictability of the British weather! But which countries are the most popular, and what do you need to do to secure an overseas mortgage?
Spain
Thousands of UK residents visit the beaches of Spain every year for a holiday. So it’s no surprise that people turn their holiday into a reality.
Buying a property in Spain doesn’t differ much from a UK mortgage. Typically, a mortgage in Spain is 25-30 years. The biggest factor for Spain to consider you as a resident is your salary and ability to pay the monthly mortgage.
We can match you with a lender to assist you through this process, who will start by looking at the following to determine your affordability:
- Type of employment
- Salary
- Age
- Any outstanding debt
- Your desired property
France
France is an excellent destination to call your home. Whether you want to be in the middle of the bustling city of Paris or the hills and heat of Cannes, there’s bound to be something that impresses the UK eye.
As you go through the application stage for overseas property in France, your lender will consider many things about your life. Your lender must trust that you can afford to live in France and will execute affordability checks to confirm your financial eligibility.
Next, they’ll look at your credit history and if you’ve had any debt in the past. Although this isn’t a certain rejection, having poor credit and past debt will make some lenders cautious about your ability.
Italy
What more could you want than pasta, pizza, and lasagne? The answer to that is a property in Italy! If you want to reside in Italy, you’ll be glad to know that it’s certainly possible. However, it’s harder to get a mortgage in Italy compared to the UK.
For starters, Italy expects a much larger deposit. So once an Italian lender checks your eligability, it’s no surprise when people can’t afford the hefty payment. Secondly, UK mortgages are over a 25-year span, which is a huge difference from Italy, which is 15 years.
Many lenders will consider your age with the term period in mind. They may reject your application altogether if you can’t completely pay off your mortgage by age 70.
Although you’re paying back for less time, you’ll pay more monthly. Similarly to France, lenders will look at your affordability and credit history. To help with this process, we can provide you with advisors to ensure you get accepted by many lenders.
United States
Finally, the US is another popular country that UK residents wish to move to. The idolization of the American Dream and the fact that the US is an English-speaking country takes off the pressure of finding your way around, buying food, and making friends.
In some cases, moving to the US can be surprisingly easy! Like the UK, the US has a 25-30 year mortgage, but some lenders can offer as little as ten years.
The marketplace in the US is competitive, and we can provide you with an expert who can help you get ahead of the game. By working with LoanCorp, you’ll have trustworthy, passionate advisors on your side to help you find the best USA rates.
Top Overseas Mortgage Providers
We can help you find a loan through one of the many providers who work with us. We’ll take into consideration your circumstances, preferred country of residence, and budget and match you with one of these lenders below:
- HSBC
- Barclays
- Natwest
- Halifax
- Santander
- Nationwide
- And many more
Should I Seek Mortgage Advice?
If you’re planning to purchase property abroad, you should seek mortgage advice from a reputable lender. This way, you’ll be able to find out what kind of loan terms are available for foreign buyers. Also, you may need to consider whether you qualify for a home loan based on the foreign currency exchange rate.
How Can LoanCorp Help?
At LoanCorp, we’ve matched people with lenders from all over the UK to help them find their dream homes without completely blowing their budgets.
We’ll find you the best mortgage rates, negotiate, and support you on your journey of finding your property overseas, and advise you on the right steps to take to suit your financial needs and destination dreams.
FAQs
If I already have a property abroad, can I remortgage that to buy a new overseas property?
Yes, you can. Buying property overseas can quickly become a recurring thing for some people. So to purchase a new property, they remortgage their current one. However, that doesn’t mean it’s an easy thing to do.
Many international lenders steer away from risky loans, as in some countries, things such as equity release aren’t as common. But with the right lender, you’ll be able to complete this process.
Can I get an overseas buy-to-let mortgage?
You certainly can. An overseas buy-to-let mortgage is extremely popular due to its lower interest rates, reasonable property prices, and sufficient income. It’s important to remember that a buy-to-let mortgage isn’t supported by the Financial Conduct Authority, so any incorrect transactions are unfortunately unprotected.
What’s the maximum age someone should be for overseas mortgages?
Generally, the age limit for a mortgage overseas is around 70-80, unlike in the UK, where people in their fifties struggle to find a lender who’ll accept their application.
For more information, look at this article about the maximum age limit for a mortgage in other countries or contact us now for more info.