If you’re considering buying a second home abroad or even investing in a buy-to-let property somewhere sunnier, you should be aware of some difficulties you may encounter when it comes to taking out a mortgage for an overseas property.

Remortgaging your current property

This is one of the main ways that people who want to invest in a property abroad manage to raise money to do so. However, depending on your current financial circumstances such as your credit rating and how much of your existing mortgage you’ve already paid off, this may not be financially ideal for you to choose to do. Buyers should also be aware that if they purchase an international property outright, they are unable to remortgage the new property.

Taking out a UK mortgage for an overseas property

Most mortgage lenders in the UK have an international mortgage service, such as Enness International, but they don’t always operate in the country where you wish to buy a property. If you’re looking to go somewhere such as France or Spain, for example, you’ll probably find it easier than those looking further afield. Also be aware that you would then have to deal with the foreign arm of the bank once the mortgage has been approved. Lenders will assess all of the financial commitments you currently have before giving the go ahead, and these can include anything from current mortgage repayments and credit card balances to store cards and any court judgements you may have against you. As with applying for a UK mortgage for a UK property, failure to provide the correct and required documentation will lead to your application being denied.

Reverse mortgages are home loans that have much more flexibility than other methods of borrowing money. For example, you can choose to get a lump sum or monthly installment payments when you sign the loan application. You can also pay the loan off whenever you can. There is no rush because lenders who provide these loans don’t expect them to be paid back in full until the applicant is no longer living on the property. So, if you plan to live in your home for many years to come, you can take out a reverse mortgage to borrow against your home’s equity now and take your time replacing the money.

Deposits needed for an overseas property

Usually, international mortgage lenders require buyers to put down 30-40% of the price of the property they wish to buy as a deposit. This is a lot higher than taking out a mortgage in the UK and can often be non-refundable depending on the country. Before you commit to anything, work out your finances on an overseas mortgage calculator. Make sure that you have been through and agreed to the required negotiations before you hand over any money and when handing money over make sure it is only to a licensed real estate agent.

Taking out an international mortgage

There are a number of important factors you need to consider to take out an international mortgage. Firstly, be aware that if your application is successful, the mortgage lender may require you to pay back your monthly repayments in a different currency. You should, therefore, be aware of exchange rate fluctuations that can change drastically and seek advice from a currency specialist service that can help you establish any potential problems. Another potential difficulty that may arise is that you may need to visit an international bank to sign the required documents. This may not be as simple as it sounds depending on the distance between where you currently live and your new property. Lastly, terms and conditions regarding your purchase may not always be in English so will probably require the use of a professional translation service to make sure you know what you’re signing up for.