Property Buying Guide
Buying Property Abroad
Traditionally it was a sign of affluence to buy a property abroad but now it can be the result of a financial struggle. House prices in the UK continue to climb, distancing first time buyers even further from their dream of home-ownership. Being a first time buyer buying overseas could be an answer.
Having been priced out of the UK property market, an increasing number of first timers are buying overseas to get their foot on the ladder. It can be a way to grow a deposit for a first home in the UK.
Rather than intending to live abroad, most first-time buyers regard their foreign property as an investment. For example, you can still buy a two-bed apartment in the Cape Verde islands, off the North West coast of Africa, for around £50,000 (compared to an average property price of around £174,000 in the UK).
The advantage of buying a property abroad is that the property can then be sold and the equity used for a deposit on a UK home. If rental returns can be guaranteed by such as lease-back schemes (where you are practically guaranteed a rental income to cover any mortgage), this option becomes all the more affordable.
To buy property abroad you will need a typical deposit of 25% of the purchase price as well as accounting for home-buying costs and British and overseas legal fees. It may still be hard to raise such a deposit. There is more about raising a deposit and how parents might help on our site.
If you want to transfer money to or from abroad for an overseas property you will need to employ the services of a currency exchange service. We have teamed up with Moneycorp who offer an extremely competetive exchange rate.
You will not be able to secure a mortgage with a UK lender against a property that is built on overseas soil. Instead you will need to arrange a mortgage with a lender operating in the country in which you are buying. You will need an overseas mortgage as your first mortgage!
How much you can borrow will depend on your existing liabilities. Typically, your entire outgoings such as rent, debts and bills – as well as your foreign mortgage repayments – must not exceed 40% of your net income – but this only really applies if you are a UK first time buyer. Although this sounds like a low 'allowance', if you are sensible with your UK rental outgoings and head for a county where property prices are low, the mortgage payments will not be onerous.
For a quote for an overseas mortgage contact our overseas mortgages specialist.
Be aware that interest rates on overseas mortgages are sometimes higher than in the UK and often variable. Some countries, such as Croatia and Thailand, do not offer mortgages to foreign nationals at all.
Before signing anything, it is crucial to seek independent advice and enlist the help of an English-speaking lawyer locally. There are companies, such as Conti Financial Services, that will arrange an overseas mortgage on your behalf and property agents that, for a percentage fee, will hold your hand through the entire property buying process. They have local legal contacts in may countries.
More information on buying property abroad in our guide:
Researching buying a property abroad l Why buy a property abroad? l Points to Consider when buying a property abroad l How to finance your property abroad – various options and likely costs l Building a property abroad l General tips for buying a property abroad l Buying a property abroad with friends l Choosing your new property l Could buying a property abroad secure your future Insuring your property abroad l Buying property abroad as an investment l Living permanently in your property abroad l Maintaining your property l Property abroad - don't stop at Europe l Property abroad - FAQs l Renting your property abroad l Tax and your property abroad l The responsibilities of owning a property abroad l The true costs of an overseas property l Viewing your property abroad l Legal considerations when buying a property abroad
Most useful and most popular pages on this site:
Look for your First Property l Seek First Time Buyer Mortgage Advice l See our Best First Mortgages Comparison Table l Find out about First Time Buyer Mortgages l Find out How to Buy a House l Learn all about The First Time Buyer Mortgage l Shared Ownership