With property markets still recovering from the financial crash, you may find yourself in a situation where you can purchase your dream property abroad outright.
However, this certainly isn’t the case for everyone, and depending on your savings, existing mortgage and the asking price of your perfect villa, townhouse or apartment, you may need to think about borrowing the capital to
accomplish your goal of living overseas. How do you go about this?
Start Early
The process of buying a property varies from country to country, but there is one similarity worth noting – and that’s getting mortgage proceedings underway as soon as possible.
You’ll need to know how much you can borrow, and specify a realistic price range before you even start looking at properties in your chosen destination. The best way to do this is by getting an Approval in Principle (AIP).
Consider Your Options
Remortgage your home:
Depending on your personal circumstances, specifically how much of your existing mortgage you’ve already paid off, remortgaging your home may provide the funds you need to buy that farmhouse at the foot of the mountains or that five bedroom villa by the sea.
Borrow froma bank in your home country:
With many high street banks offering an international mortgage service, it’s possible to set up a mortgage arrangement at home. Bear in mind that banks may only provide mortgages in certain countries, generally those with established property markets. You will also be dealing with the foreign branch of the bank once the mortgage has been arranged.
Find an overseas lender:
It’s definitely worth looking into the possibility of setting up your mortgage overseas. Borrowing abroad may score you a better deal, particularly in established property markets where a wide range of mortgage providers offer competitive rates. However, be aware that overseas mortgage brokers aren’t covered by the Financial Conduct Authority (FCA) and that borrowing in a foreign currency leaves your repayments at the mercy of exchange rate fluctuations.
Destination in Focus: Mortgages in Portugal
Recently ranked as the world’s friendliest country for expats, warm and welcoming
Portugal remains popular with foreigners seeking a property in the sun. The influx of expats has driven the mortgage market to become increasingly competitive, and with lending conditions continuing to improve, taking out a Portuguese mortgage could prove excellent value for money.
The majority of banks will loan non-residents up to 65% of the property value, whereas fiscal residents (those who pay taxes in Portugal) might be offered 85-90% mortgages. However, finding these deals may require the help of an
experienced mortgage broker.
You will need to supply the following to secure a mortgage in Portugal:
Proof of income
In order for the lender to ascertain that you can comfortably afford your monthly repayments, they will ask for proof of your current earnings, such as salaried income, dividend payments and income from pensions, investments and rentals. Bank statements, tax returns and pay or pension slips might also be requested.
Credit history
Lenders require a credit report from your country of residence and will also check for any existing liabilities in Portugal.
Existing debts
Your credit report, along with a loan or mortgage statement, will also help lenders analyse your fixed monthly commitments for existing liabilities such as personal loans, credit cards and mortgages.
Employment history
Proof of current employment may be required in the form of a reference letter from your employer. Self-employed applicants should be prepared to provide adequate financial records, confirmed by your accountant.
Take the stress out of buying a home overseas
The vision you had of relaxing on the beach, dining al fresco on the terrace and being lulled to sleep by the sounds of the ocean can feel distant and maybe even out of reach as you immerse yourself into the foreign world of mortgages, tax and legal procedures. But buying property overseas doesn’t have to be a stressful experience if using an experinced mortgage broker.
