If this is the year you plan to turn your dream of owning a home in the sun into a reality, there are a few things you need to know to ensure a smooth overseas purchase. Buying property abroad comes with its own set of challenges, but armed with the right knowledge, you can prevent your holiday home dreams from turning into a nightmare.
Choosing the Perfect Location
The most popular destinations for UK buyers looking for a holiday home are Spain, France, and Portugal. However, it's important to consider the potential return on investment as well. Research the housing markets in your potential destinations to make an informed decision.
Overseas House Prices
House prices in different countries can vary significantly. According to estate agent Knight Frank, prices rose in 86% of the markets they tracked in 2018, but overall price growth is expected to slow down due to economic uncertainty and tighter market regulations.
Your Rights in the EU and Elsewhere
Before making a purchase, it's crucial to check the regulations in the country you wish to buy in. Brits currently have the same rights as residents in many EU countries, but this could change with Brexit. It's essential to be aware of the potential impact and ensure you have the right to reside in the country you choose.
Financing Your Purchase
If you don't have sufficient cash available, you'll need to arrange a mortgage with a lender in the country you're buying in. It's recommended to work with a mortgage broker specialized in overseas mortgages to navigate through the process smoothly.
Lending Criteria for Overseas Mortgages
When applying for a mortgage abroad, you may need to provide more paperwork compared to a mortgage in the UK. The lender will assess your income and outgoings to ensure you can afford to pay back the loan. It's also important to note that borrowing as much of the property's value as in the UK may not be possible.
Mortgage Interest Rates
Interest rates for overseas mortgages are generally comparable to the rates in the UK. However, fixed-rate mortgages usually come with redemption penalties if you pay them off early.
The Importance of Independent Surveys and Lawyers
Before finalizing the purchase, it is crucial to conduct independent surveys to ensure the property's condition and value. Hiring an experienced property lawyer who understands both the local legal system and English is essential to protect your interests.
Costs and Insurance
You need to factor in government taxes, legal costs, and insurance when budgeting for your property abroad. Building insurance is necessary, and contents insurance and public liability insurance are important considerations if you plan to rent out your property.
Buying property abroad can be a rewarding experience if you approach it with the right knowledge and guidance. Take the time to research the location, understand the local regulations, and work with qualified professionals throughout the process. By following these steps, you can turn your dream of owning a holiday home into a successful and enjoyable reality.