If you’re considering purchasing a property abroad, then you’ll want to ensure that you are fully prepared. Before you even begin viewing any potential properties you’ll need to take into account your budget and all the costs involved. International mortgages can often be pre-approved quite ahead of time, saving you time and money, but you’ll need to be sure you know your calculations. You’ll want to take into account the actual cost of the property, required deposit amounts, current and future exchange rates as well as any legal fees and tax requirements.
A lot of sellers over seas won’t accept your offer until you can prove that you already have funding available, or it has been pre-approved. When purchasing a re-sale property, the completion date will usually be set at around 30 - 45 days after the sales contact has been signed. Some of these agreements will have financial penalties if this closing date is not met. For this reason, you’ll want to be sure that you have the funds available, and may wish to enlist the help of a lawyer that specializes in the local law.
Generally speaking, for properties overseas, mortgages are available to a maximum of 70% loan to value and for up to 30 years. Age restrictions may also be a factor. Some countries such as the US don’t have age restrictions on mortgages but other countries do, with the term may be only going up to the age of 70 or 75. International mortgages will usually be based on affordability, so proof of income will be required, and generally, the ratio of debt to income should not exceed 36%, however there are exceptions for this.
The currency of the mortgage secured against the property will usually be determined by the currency of your income that is going to be funding it. The mortgage can be in local currency, or alternatively, you can take out multi-currency mortgages. It will really depend on your particular situation, so it’s worth speaking with an expert to see what’s right for you.
You’ll usually be required to open a local bank account in the country of the new property, to allow for any local taxes, utility bills, and other local costs that might crop up. Some mortgage lenders will also require you to have six months worth of mortgage payments in your account, in advance. A side from that, you may also need to have the deposit and closing costs seasoned, meaning that you need to show where the actual costs have come from.
As you’re dealing with another country, currency exchange rate will obviously come into play, and can have a huge impact on all the costs involved. It would be worth registering with a currency exchange company, as they allow you to book up funds up to 18 months in advance. This can allow the costs to be fixed, irrespective of any exchange rates.
With regards to tax issues when buying over seas, it would be worth consulting with a tax advisor or employing a local accountant. Tax may be payable on income and also any capital gains, however, the interest of the mortgage can be offset against this, as well as certain other expenses.
We have built up a wide network of lenders who specialise in International mortgages and to this end we be happy to introduce you to these lenders in order to obtain the best International mortgage possible.
If you would like further details please do not hesitate to contact us on 0800 612 7729 or fill in a few details on enquiry form and have one of the Leapfrog Finance Advisors call you back, alternatively, email us at Enquiry@leapfrogfinance.co.uk