Overseas Mortgages

Obtaining an Overseas Mortgage

When obtaining an overseas or foreign currency mortgage, additional practicalities must be taken into account. From language barriers to taxation worries, obtaining an overseas mortgage is fraught with possible difficulties and requires an incredible level of organisation.

Regulation
A huge potential pitfall for UK buyers looking at overseas mortgages is to assume that the same regulations apply, globally. This is simply not the case. For instance, the issue of government reclaiming land and houses is not something that a UK buyer would even see as a possible risk, whereas in some less developed countries land grab is a very real issue and performing the necessary checks is something that becomes increasingly important in foreign countries. Eastern Europe poses a particular risk for investors. For example, Croatia has absolutely no government regulation dealing with mortgages or the sale of financing and buyers must look after their own interests.

There is no universal set of regulations that governs the mortgage market, worldwide. Therefore, possessing an in-depth understanding of the particular regulations of the country that you are looking to purchase in is absolutely vital. To gain this sort of knowledge, an independent local expert will be necessary and an additional cost that is, frankly, unavoidable.

Language Barriers
Certain countries require that mortgage agreements are signed in the local language; for example, France and Spain. Unless you are fluent in these languages, accurate translations are absolutely essential. Ideally, these translations should be carried out by a registered government translator, as this would mean that the translation would be considered adequately accurate for court or regulatory proceedings; hopefully, not something that will be necessary!

In any event, having an English speaking local lawyer will be crucial for any overseas purchase. Mortgage documents are complicated, at the best of times, particularly when standard terms are likely to be different from those that investors are used to in the UK. To attempt to understand these documents when they are not in your native language is a huge mistake and not an expense worth scrimping on.

Summary
When committing to an overseas property, costs for the services of local professionals is likely to be higher than in the UK;
a UK purchaser must dispel any thoughts that the regulations that apply in the UK will apply abroad; in fact, in some countries there are no regulations at all;
always ensure that all documents are translated accurately BEFORE any documents are signed.