What To Consider When Buying A Home Abroad

Jane Wardle

Written by Jane Wardle on November 27, 2018

Updated November 27, 2018

buying a house abroad

Buying a home abroad is a dream that many Brits have, whether it’s a holiday home for a bit of sun throughout the year or the perfect retirement plan. Whatever your reason for wanting to purchase a property abroad, it is important to properly research and understand the processes involved.

Buying a property overseas is often a lot more complicated than purchasing a home in the UK and there are a number of things you must consider. Before you set your heart on a stunning Spanish villa or cute chateau in the French Riviera, there are a number of things you need to know about buying a home abroad.

Location, Location, Location

France and Spain are two of the most popular destinations for Brits buying homes abroad, but there are plenty of other countries with loads to offer and at much more affordable prices. When you are considering the location of your foreign home, think about every aspect of the area including the property prices, exchange rates, languages and local amenities.

It can be very easy to fall completely in love with an area when you are on holiday but living there could be a completely different experience. If you aren’t convinced the area is going to be for you long-term, consider renting a property there short-term to get a real feel for the place before you commit to buying.

When thinking about location also consider how easy it is to travel home if you have commitments in the UK. You will need good transport links to cities and airports to make sure you can get back to the UK without too much hassle.

Financing The Purchase

How to finance the purchase of a property abroad

One of the most important aspects to consider when buying a property abroad is how you will pay for the new home. If you want to get a mortgage to buy the property, then there are a few things to think about.

British banks and lenders may offer an overseas mortgage for a property abroad, but most have become less willing to lend for foreign property purchases since the 2008 financial crisis. UK banks will also only provide mortgages in countries that they have their own offices in, so you will need to find out if any UK banks cover your chosen location.

It is possible to get a mortgage from an overseas lender in order to purchase your new property. Generally, you will need to use a specialist broker who can give you tailored information and details on buying a home abroad with a foreign mortgage. If you don’t want a mortgage for your new home, you could consider using cash to fund your property purchase. Many people release equity from their UK home in order to buy a home abroad without the need to borrow.

If you get a mortgage where your payments are made in a foreign currency then your lender must inform you if the exchange rate fluctuates more than 20%. This could affect your ability to meet your mortgage repayments, and lenders must offer you the option to repay in a different currency.

Understand Your Taxes

When you are thinking of buying a home abroad, you should find out about all the taxes you will be liable to pay. Depending on the country you may have to pay purchase tax or income tax on rents. There might also be other ongoing tax payments that you will need to pay for owning your home abroad. If you are also keeping a home in the UK, think about any taxes you will still be liable to pay for that as well. Understanding foreign tax laws can be difficult, and it is often best to seek help from a local tax expert.

Many countries have strict laws on who can inherit property after you die. If you are buying a property abroad then seek independent legal advice beforehand, so you are fully aware of what happens to your new home should something happen to you.

Have An Exit Strategy

Purchasing your own home abroad might seem like your dream right now, but you never know what could happen in the future and one day you might decide it isn’t for you anymore. The property market in some countries is not great and can result in homes being on the market for months or even years.

Before committing to buying a home abroad make sure you have factored in a reasonable exit strategy should you want to move out.

Buying a home abroad is a huge decision and one that should never be taken lightly, spend plenty of time researching and seeking advice from experts before going ahead and purchasing your dream home.

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