Buying overseas
Most of us dream of moving overseas for a lifein the sun at sometime or another and, living theholiday dream is one of the main reasons more and more Brits decide to buy property abroad each year. But there is a lot to consider before you invest in a life in warmer climes.
Reasons for buying
The first thing you have to be clear about is why you want to buy overseas. For example, if you buy a holiday home first, but later decide you want to let the property, you could quite easily buy the wrong property. This is because you would have different considerations to take into account if you were intending to go down the buy-to-let road, such as location, distance from the beach, amenities and so on.
Finance
Once you have a clear idea of your reason for buying, look at financing that purchase. You have three options: buy outright from personal resources such as savings; release equity from a UK property; or take out an overseas mortgage.
If you release equity from your UK home by remortgaging, then your income is in the same currency as your debt, but you could miss out on a lower interest rate overseas. On the other hand, by taking an overseas mortgage in another currency, you're taking on exchange rate risks. One solution is to fix your exchange rate before taking the plunge, through companies such as Travelex or HIFX. Typically, you can fix the exchange rate for up to two years and this means your monthly repayments won't be at the mercy of currency fluctuations during that time.
For your mortgage, you can have two choices; either approach foreign lenders directly, or go through a specialist financial adviser. Some British banks have special departments to cater for those looking to buy property overseas, such as Banco Halifax Hispania - Halifax's Spanish lending arm. Barclays, too, offers mortgages in France, Spain and Portugal.
Finding the right property
When looking for a property, don't be blinkered by the romanticism of it all. Be aware that peculiar-looking properties may appeal to you, but have little appeal for the market as a whole. Always bear in mind the resale potential of a purchase and don't get taken in by extravagant or whimsical features. Search for your ideal home overseas in our Buy/Sell section.
Legal issues
The next step is to hire an independent, reputable solicitor to carry out a survey and check that the title is true and carries no debts. Use our solicitor search to find a suitable one for you.
Property laws differ from one country to another, so be aware that not everything's the same as it is in the UK. You must also consider all purchase-related costs, as there may be additional local property taxes. It is also necessary to find out your tax liabilities - you may have to pay income tax on any rental property, or your estate could be faced with inheritance or capital gains tax. Above all, look into every detail and do not assume the process is the same as it is in the UK. Only then can you pack your belongings and move to your new life in the sun.
ESPC Money Management offer a valuable service from a team of Independent Financial Advisers. Gain peace of mind by calling 0845 111 1911 to discuss your ideas and learn the financial implications from those in the know.