What is an overseas mortgage?

An overseas mortgage is when you get a mortgage for a property that’s not in the UK.

You might get an overseas mortgage if you want to:

  • buy a holiday home abroad

  • move abroad when you retire

  • buy a home abroad to live in

Please note that Trussle does not offer overseas mortgages. 

How an overseas mortgage works

Each country will have different rules for overseas mortgages. A specialist overseas mortgage broker or lender can help you understand the process.

Differences with getting an overseas mortgage may include:

  • more paperwork 

  • not being able to borrow as much 

  • being fixed on the same deal for most of the mortgage term instead of remortgaging

  • having to put down a bigger deposit. In Spain, you’ll need a deposit of 30 to 40%.

Some deposits are not refundable. So check you’re happy with your contract before paying your deposit.

To buy a house abroad you can:

  • remortgage your UK home to buy a home abroad outright

  • borrow from a UK bank that has an international mortgage service

  • arrange your mortgage from a bank overseas

Risks when buying a home abroad

There are risks when buying a home abroad. Particularly if you’re getting a mortgage from a bank overseas.

Risks of buying a home abroad include:

  • having repayments change due to changes in the exchange rate

  • charges for transferring money abroad

  • missing payments and fees that you might not know you have to pay if your taxes change 

  • penalties and legal action if you do not follow the local property laws

  • not having the protection of the Financial Conduct Authority (FCA). In the UK you’re covered by the FCA if you get bad advice

It’s best to do a lot of planning before you decide on an overseas mortgage.

Choosing a mortgage provider based in the UK or with an international branch is less risky.

If you’re using a provider outside the UK, preparing can help protect yourself of the risks. 

To reduce the risks:

  • check local property law in the country you’re buying

  • find out what taxes you need to pay and check how they may affect the tax you pay in the UK

  • check what other costs there are like international bank transfer fees and/or translator fees

  • check if you’ll need planning permission if you plan to adapt or alter the property

  • get an interpreter you trust if you’re not fluent in the local language

  • get a solicitor that specialises in international transactions and conveyancing. It’s best to find one that’s registered with the Law Society in the UK. Make sure they are fluent in English and the local language

Talk to a specialist international broker or adviser for advice about overseas mortgages. Trussle does not currently offer overseas mortgages or advice on overseas mortgages.

Benefits of buying a home abroad

Buying a home abroad means learning another country’s processes and rules. But there are also benefits.

Benefits include:

  • lower mortgage rates in some areas of Europe, so you could get a better deal

  • earning money by renting it out

  • being able to split your time in different countries

  • saving money on holidays

  • making a profit when you sell, if you buy in an area where property values are going up

Lenders for overseas mortgages

Most UK high street banks offer overseas mortgages and advice.

Some UK lenders have international branches that can help you get an overseas mortgage. This depends on the country you plan to buy a house in. 

These include:

There are also specialist overseas brokers.

Brexit and buying abroad

You’ll still be able to get an overseas mortgage after Brexit.

We will not know the full impact of Brexit on buying abroad until the transition period ends on 31 December 2020. 

We could see changes in things like:

  • taxes

  • visas

  • property laws

  • permits

Countries popular with expats like Spain and France are unlikely to try to make it harder for expats to buy abroad. 

Buying and owning a holiday home abroad should also not change much after Brexit. Anyone can get a mortgage in Spain as long as they have good credit

You’ll still be able to rent out your holiday home, you do not have to be an EU citizen to do this. 

There may be some changes if you’re no longer an EU citizen. 

In some countries:

  • non EU citizens are taxed more

  • EU citizens can borrow more 

There has been a slight drop in British people buying property abroad in places like Spain since Brexit.¹

Brexit has not affected property prices in countries like Spain.² 

You'll have the same rights as EU citizens if you register as a resident. You can register if you’ve lived, worked or studied in the EU before 31 December 2020. 

There are still discussions as to if British citizens living in the EU will be able to move to other EU countries after the Brexit transition deadline. 

Your pensions and benefits will stay the same if you were already living in the EU before 31 December 2020. 

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Sources

¹ Property Reporter: How does Brexit affect people wanting to buy property in Spain?

² Property Wire: How does Brexit affect people wanting to buy property in Spain?