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Your property may be repossessed if you do not keep up repayments on your mortgage.

Changes in the exchange rate may increase the sterling equivalent of your debt.

The FCA does not regulate foreign mortgages.

For Foreign mortgages we act as introducer's only.

foreign currency mortgages

Buying A Property Abroad

For this type of business we are pleased to be able to introduce you to Connect Overseas and Conti, two of the UK's leading overseas mortgage specialists, who provide a first class service for those looking to purchase or re-finance an overseas property.

Some Food for Thought

The most important thing to remember is that buying a property in another country can be a very different experience to what you may have been used to over here. This is why we recommend that you seek professional legal advice, either from a UK based solicitor with experience of this type of purchase or from one based in the country in which you want to buy, who speaks English, and who also has experience of dealing with international clients.

Here are just a few examples of how things can differ:

The cost of buying abroad is often a lot higher than in the UK, particularly in Portugal, Spain, Italy and France, where you can end up paying 10 or 15 percent in estate agent fees, legal charges, mortgage registration fees and VAT.

The ongoing expense of maintaining the property - utility bills, service charges, community and local rates can be just as expensive as in the UK. France and Spain also have various wealth taxes based on the value of your property.

In France you have to make a potentially non-refundable 10 percent deposit at the point the sale is agreed, so expert legal advice is crucial to ensure that the correct clauses are inserted into the initial agreement document to make sure you don't lose the deposit if the sale falls through.

Under Spanish and Portuguese law, any debts on the property you buy automatically pass to you when you complete the sale. This can include debts relating to any previous mortgage on the property, making it essential that the legal work is done thoroughly.

Vendors in the Mediterranean countries in particular, usually incorporate a large portion of bluff into the asking price and if you don't go in with a sufficiently low offer, you may end up paying over the asking price. Negotiation is key, be prepared to haggle!

Paying for your Holiday Home

Assuming that you do not have the cash to pay for the property outright, there are two main ways to finance the purchase of a property abroad: Providing that you have enough equity, you could take out extra borrowings against your home in the UK by taking a further advance on your current mortgage or by remortgaging.

Alternatively you could take out a separate mortgage on your holiday home with a lender based in the country in which you are buying, and in the local currency.

Some things to be aware of if taking out a foreign currency mortgage abroad:

The most important thing to remember is that exchange rates can be volatile. If the Pound strengthens against the currency of your mortgage, you could benefit, but on the other hand, if the Pound weakens, you could end up taking a loss. The headline interest rates in many countries, particularly in the euro-zone and perhaps the USA, are currently quite a bit lower than in the Bank of England Base Rate. However, it should be borne in mind that British lenders tend to work on much smaller margins than foreign lenders, so the difference to you as the borrower might not be as much as you had first thought.

Most European lenders will also take into account your UK mortgage debts and other outgoings when considering your application. Spanish lenders won't lend to you if your existing loan repayments amount to more than about 35% of your income.

In many countries, lenders work on a lower loan to value ratio than in the UK (typically, this could be a maximum of 70 or 80%, compared to anything up to 100% in the UK). So, be prepared to have a reasonable sum of capital to put down.

Letting laws in many foreign countries are much more heavily biased in favour of the tenant than they are in the UK. Consequently, there can be something of a reluctance among lenders to grant mortgages on properties which are going to be commercially let out. On the plus side, most lenders do not have a problem if you plan to let family and friends use the property when you are not there, as an occupied property is considered less of a risk than an empty one.

Your property may be repossessed if you do not keep up repayments on your mortgage.

Changes in the exchange rate may increase the sterling equivalent of your debt.

The FCA does not regulate foreign mortgages.

For Foreign mortgages we act as introducer's only.

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