First things first – ALWAYS DO YOUR HOMEWORK and get the best advice possible. This is absolutely priceless and can make all the difference.
Here are a few suggestions for you:
- Look around to find the best deal for you
Remember that the overseas mortgage market is completely different to the UK – each country has its own national and local legal restraints, foreign exchange requirements and customs, not to mention that there’s a language barrier!
Although the basic administration can look similar, you need to understand what the requirements are for the lender in the specific country you’re dealing with.
Using a specialist broker ensures you have help every step of the way. They will have a superior knowledge of the overseas markets and connections with a selection of lenders, so can advise you on your best deal and make sure you comply with all the conditions, as well as helping with currency exchange.
- There can be some plus sides to going with an overseas lender
Some UK buyers borrow against their home in the UK if their equity is sufficient.
Overseas mortgages are becoming more and more common, as the market has developed and rates are sometimes more favourable than in Britain. To add to that, it can sometimes prove more tax efficient to get an overseas mortgage as it reduces your inheritance tax liability due to there being a debt on the property.
If you take out an overseas mortgage, in some way, it takes the pressure off you, as the lender does their own property checks, making sure there’s a legal title deed, that the property is registered to you and that a valuation of the property is done.
- Consider obtaining a mortgage in the local currency
Look into the options of getting a mortgage in the local currency, as even small exchange rate changes can make a big difference to your payments, rental income or purchase price.
Also, don’t forget that even though you’ve paid the asking price, bills don’t end there! There’s lawyers’ fees, insurance, and local and national taxes which can add as much as 10% to the cost of your property.
- Approval in Principle (AIP)
Quite often, formal offers from overseas lenders won’t happen unless you have already signed a sale and purchase contract for your property. Ask your lender for an AIP to prove that you’re going to get hold of the necessary funds before signing. This might also help when you’re negotiating on price.
Regardless whether you’ve found your property or not, the AIP will tell you how much you can borrow so at least you can start looking within an affordable price range. It proves you’re a serious buyer and can make the application process a bit quicker – plus, it’s FREE, so you’ve nothing to lose.
In most cases, the application process takes six to eight weeks, after which you should have received an offer. However, sometimes it can take as long as a few months so make sure you’ve prepared as much in advance as possible to speed things along.
You will probably need:
• Your passport
• Proof of address (at least two documents, such as a utility bill, or council tax bill)
• Your bank statements from the previous three to six months
• Payslips to prove what is coming in to your account
• Your latest P60
• If self-employed, you’ll need your last two or three years’ accounts and tax returns
Assets are considered important to overseas lenders, so it’s important to be able to prove these and have your accounts in good order. Not only that, but you need to prove you can maintain the mortgage payments when they use the debt-to-income ratio.