My wife and I have decided we would like to buy a property in the south of France. We have about half of the money we need but would want to borrow the remaining half – we can pay it back using the money we’ll save on overseas holidays in the future. Can we get a mortgage for a property outside the UK?
Diane Fish of Smith & Pinching responds:
There are two ways to potentially fund the purchase of your overseas holiday home through borrowing. Any loan secured against the property you are buying will need to be a specific overseas property mortgage, which is not a mainstream product available from the majority of UK mortgage lenders.
Instead, you may need to source the loan from an international finance company such as an international bank, or from a mortgage provider in the country in which you are buying. A specialist mortgage broker will help you look at what overseas mortgage options are available to you.
In general, overseas mortgages may require a larger deposit than standard UK mortgages and may have higher interest rates and fees. You may also need to take legal advice about the implications of property ownership in the country concerned so you understand any conditions that apply to both the purchase and a future sale. It’s important to bear in mind that your repayments may be in a different currency to your own and so may vary considerably depending on the prevalent exchange rate.
An alternative to using an overseas mortgage might be to take out a mortgage on your UK home. This may be possible if you have not already used all the equity on your current home for a mortgage, but lenders will look at your ability to afford increased repayments when deciding if they should lend to you or not. I recommend you take independent mortgage advice to explore which option might be most suitable for you.
Your home may be repossessed if you do not keep up payments on your mortgage. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. Smith & Pinching’s minimum mortgage advice fee is £700. Any opinions expressed in this article do not constitute advice.
For more information, please visit www.smith-pinching.co.uk
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