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Getting a mortgage for an overseas property

Getting a mortgage for an overseas property is one way to finance your purchase.

This guide will explain what to do, whether you’re moving to another country, buying a holiday home or you want to diversify your portfolio with an international investment.

What is an overseas mortgage?

An overseas mortgage is one that’s on a property outside the country where you live. You can arrange one with a lender in your home country or in the country where you’re buying. If you’re an expat, you might still choose to get an overseas mortgage from your home country. There are several reasons for this, which we’ll explain shortly.

Arranging an overseas mortgage in your home country

Talking to a lender in your home country is an option if you find one that has international services and has a mortgage offering in the country where you’re buying. You’ll have access to financial advisers who understand how applications differ overseas. They can help with things like taxes, exchange rates and insurance, and prevent any translation issues or fees. They’ll also have access to your credit report, which could support your application.

If you own property in your home country, you could also remortgage and use the equity released to fund your overseas purchase. This could allow you to avoid larger deposit requirements and larger interest rates - but your mortgage balance will increase. Make sure you can afford the repayments before you make any decisions.

You might also be able to secure a loan against savings, shares or other financial assets and receive the cash in a different currency. That would mean you’d miss out foreign exchange rates altogether.

Arranging an overseas mortgage in the country where you want to buy property

Overseas lenders and mortgage brokers could have extra insight into the best deals available in that country. In some places, rates might be lower on average than any in your home country. However, getting a mortgage as a foreigner can prove quite difficult, which might mean you’re offered much higher interest rates anyway.

UK mortgages are covered by the Financial Conduct Authority. Regulators and governing bodies in other countries vary. You should think about getting an independent lawyer to help with differences in taxes, laws, and insurance. You’ll also need an independent translator if you don’t speak the country’s official language.

Using an overseas lender will most likely mean that your repayments are in a foreign currency. Bear in mind that exchange rate fluctuations could affect you either positively or negatively.

Can you get buy-to-let mortgages abroad?

If you want to own a property overseas to rent out, you need to check the laws and regulations of the country where you want to buy. For example, there’s no limit to the number or type of properties you can buy to let in Canada. In China, however, foreigners can only own one property and they must live in it themselves. Popular places for foreigners to own buy-to-let properties include the US, the UK, France, Turkey, and Poland.

Deposits for buying property abroad

The deposit you’ll need for an overseas mortgage will vary depending on the country. Outside your home country, you can expect minimum deposits from 15% to 50%. Your financial situation and responsibilities will also affect this figure.

Find out more about your options for buying a property abroad, or speak to us about our international mortgages offering. We’ll help you get in touch with the right team who can answer any questions you might have and support you through the overseas mortgage application process from start to finish.

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