Overseas Mortgages  Ongoing Implications

Overseas Mortgages

When purchasing a property abroad, the issue of financing becomes slightly more complicated, for further information click here...

Get a Free Quote Ongoing Implications of an Overseas Mortgage

Simply, an overseas mortgage works in the same way as UK mortgages; the capital is borrowed and then paid back on a monthly basis, over the duration of the loan. As with a UK mortgages, it is possible to pay the mortgage on an interest-only basis, which means that the capital will have to be accounted for separately, at the end of the term. There are, however, other issues that become important when dealing with an overseas mortgage that should be considered on a continuing basis.

Additional Ongoing Costs with an Overseas Mortgage
Certain ongoing costs are additional to the standard mortgage payments that would not necessarily be a consideration for a standard UK investment mortgage. For example, there are different requirements regarding the level of insurance that will be demanded by various mortgage companies, across the globe. In the UK, it is normally a requirement to have buildings insurance but not contents insurance; in France, on the other hand, there is no such requirement, but it is necessary to take third party insurance if the property is to be let out on a commercial basis.

Currency differences are another additional cost that has to be considered as part of an overseas mortgage. If the mortgage has been taken out in a foreign currency, then any fluctuations in the value of the British pound against the local currency will have an effect on the regular mortgage payments that are being paid out.

Anyone who has a mortgage that is being paid in a foreign currency should strongly consider having a bank account facility in the same foreign currency. Banks in the UK usually charge a fee for accepting foreign currency cheques or transfers, which will seriously dent your profits. Not only could you be charged when the cash comes into your account, but you may also be charged when you make your regular payments such as management fees, insurance and maintenance fees.

Other costs that should be considered include additional management fees to maintain the property. Wealth taxes, which are payable on the value of property owned, are levied in many European countries such as Spain.

Summary
Bullet Point When considering an overseas property, there are other financial considerations that need to be taken into account as part of the budgeting process;
Bullet Point these include currency exchange and the additional costs of accepting payments in a foreign currency;
Bullet Point there are also potential regular costs such as wealth tax that are commonplace in some foreign countries but are easily overlooked.

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