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How To Finance Your Property Abroad
It’s important to decide how you’re going to finance the purchase of your property abroad. Although most property abroad is undoubtedly cheaper than its UK equivalent, it is still a substantial investment. It makes sense to
investigate the options for financing the purchase so that you can decide which is the best option for you.
The first thing to note is that UK mortgage companies will not give you a mortgage on a property abroad. If you need to take out a mortgage, you have two options:
• Re-mortgage your current property. If you can get a re-mortgage for all or part of the value of your current home, you may be able to pay for your property abroad outright. Shop around for a good deal, because if you can’t keep up the mortgage payments, your home in the UK could be repossessed.
• Mortgage with a foreign bank. Banks in the country where you are purchasing your property abroad will give you a mortgage. If you are buying somewhere that’s popular with overseas owners, you will be able to find a bank or mortgage broker that can speak English and talk you through the details. Alternatively, a mortgage broker, like our mortgage expert, can act as an intermediary between you and the bank to ensure that you have the funds to buy your property abroad.
There are other finance options to help you buy your property abroad. They include:
• Equity release – this is a finance arrangement with a bank or other finance provider, where they release a certain percentage of the value of your home in return for a mortgage over that percentage of your home that has been released. The interest rates on these types of loans can be higher than traditional mortgage rates, but they do allow you to release a capital amount that could be enough to buy your property abroad.
• Joint ownership – buying your property abroad with friends or family means that you get the property you want with less capital
outlay. If you buy your property this way, you will have to set down in clear legal terms who owns how much of the property, and
have something in place that covers you if the other party wants to sell their share.
• Use your pension – if you are in a position to use the tax-free lump sum portion of your pension then this could be a way to finance the purchase of your property abroad. Make sure that you know exactly how much you’re entitled to cash in, and check the rules of your scheme before you commit to paying for your property.
• Savings – if you have enough savings built up to finance your property abroad, then use them. Be aware though, that there is no guarantee that the price of your property will rise, and that you or your heirs will get the same amount of money back when the property is re-sold.
Article written By HolidayHomeNow.
About the Author: Author Bio::
certified financial planner (CFP) WA
financial advisor WA