Expat ins and outs for UK mortgages on overseas property

Published:  7 May at 6 PM
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A place in the sun with complete with dream home is the ambition of many expats, but financing the deal of a lifetime can be fraught with problems.

Few of the overseas locations favoured by expats as second home or permanent residence locations offer specific products aimed at foreign house purchases. New EU restrictions on mortgage affordability are ruling many out of the game, and in farther-flung destinations it’s been traditionally impossible for foreigners to get a loan for property purchase.

However, as the worldwide credit crunch recedes, multinational and local lenders are loosening their purse strings and beginning to agree expat mortgages at a price. The first point to keep in mind is that the legal and financial niceties of property purchase vary hugely between countries, especially those outside the EU.

The two most straightforward alternative routes to financing that dream home are to raise cash against your UK property or to borrow against an already-owned property abroad. The latter is the riskier option, as homeowners in Spain and Cyprus have already found.

British lenders in the main are neither happy nor willing to offer mortgages on overseas properties, as currency rate risks and the problem of securing the loan against foreign bricks and mortar are considered an unattractive risk. Should a mortgage be arranged by securing the loan on your UK property and unforeseen financial problems occur later, you may find your lender attempting to force the sale of your UK home to cover your debts.

A few online UK websites are offering expat mortgages on overseas properties, but these should be treated with suspicion and checked as to registration with the Financial Conduct Agency. Unregistered mortgage agents and FAs providing the service offer you no protection under UK law in instances of fraud, misdemeanor or other financial disasters.
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