Five tips for getting an overseas mortgage
For example, as a resident in France, you are more likely to be able to get a mortgage at around 100% Loan to Value (LTV) than a non-resident, with better rates available with a deposit of around 30%. However, as a non-resident, you would be looking at closer to 80% LTV in the current market.
There are a number of key factors to consider: how the process works in your country of choice, how long it is likely to take, and how much can you realistically afford. Here are some top tips for obtaining an overseas mortgage:
- Know exactly what funds you have available
Before you even think about where you want to live or what you want to do, you will need to assess your funds and work out how you are going to afford your property. Will you need to release equity from your UK property to obtain a mortgage in your new country? How much deposit will you need? Generally, when applying for a mortgage as a non-resident, you will be required to provide a larger deposit than you would in the UK – around 30-40% instead of 10%. You will also need to make sure you are able to back up your application with proof of income and identity, and details of your bank account and credit cards. In many countries, your income will be the single most important element in successfully gaining a mortgage.
- Remember that you will have costs above and beyond the actual house price
Before you work out how much of a deposit you can give, you need to consider all additional costs on top of the house price – including taxes and supplier fees. These costs could total as much as 15% of the house purchase price, so you will need to ensure that this is included in your budget.
- Think about the cost of living in your new country and how this will affect your quality of life
It’s a good idea to assess what you need to expect in terms of day-to-day costs in another country. Quite often, there’s a presumption that everything will always be much cheaper abroad than it is in the UK, but this is not always the case – so it’s important to assess this in advance. For example, in Spain you will find that things like electricity and water bills are much cheaper than in the UK, but your internet and satellite cost may well be more expensive. In France, you may find that some of your day-to-day grocery items actually cost a little more than they would in the UK – with toothpaste and teabags some of the biggest offenders. Fuel costs, however, for both petrol and diesel, tend to be much cheaper across Europe than they are in the UK – and the same goes for eating and drinking out costs.
- Consider the different types of mortgages available
Mortgages are not one-size-fits-all – each country will offer numerous choices. You will need to assess what it means for you if you take out a mortgage with fixed, capped or variable rates – and whether you should go for an Interest Only or a Capital Repayment mortgage.
- Speak to a currency exchange specialist
If you need to transfer money into your new country, whether this is to pay a deposit on your new property or as regular payments to pay your monthly mortgage payments, it’s important to be aware of what could affect the exchange rate. The currency market is live, and continuously fluctuating, so building a relationship as soon as you can with a currency exchange specialist, such as our partners SmartCurrencyExchange.com, will enable you to monitor the market, and discuss your choices, minimise your risk and maximise your money. They also offer a number of tools and resources that can help with this, such as an automated regular payment plan for all monthly payments, or fixing the exchange rate in advance to protect your transfers from exchange rate fluctuations.