nigel woollsey

Nigel Woollsey

Online Writer
Published: 25/09/2019

At a glance

  • You can’t use a UK mortgage product to buy a home abroad. You must instead get an ‘overseas mortgage’ – normally from a lender in the country you want to purchase in.
  • Do your research! Find out as much as you can about house purchase fees, taxes and other expenses that you’ll need to pay in addition to the purchase price.
  • Deposits overseas can be a lot more than the 5% or 10% you might pay here in the UK.

People buy property abroad for several reasons: as a holiday home, to invest in or perhaps to rent out to pay the mortgage. Whatever your reasons, our easy to understand guide will take you through the most common questions about the where and how to get an overseas mortgage.

Can I get a mortgage for a foreign home from a UK bank?

To fund your purchase you’ll need what’s called an ‘overseas mortgage’. You can’t use a UK mortgage product or deal for a foreign home. In addition, it is rare that a UK bank will lend against property in another country – even if they have branches and operations there themselves. Most often you’ll need to obtain a mortgage from a lender in the country you intend to buy in. However, do be aware that some won’t accept applications from people who aren’t permanent residents in their country.

Help can be found by using a specialist overseas mortgage broker who will able to help with what mortgages and lenders are available, as well as finding you the best deal.

There is also a third option: if you are lucky enough to have enough equity in a UK property (such as your usual UK home), then it is quite common to remortgage to raise the cash to pay for your new overseas property.

A word of warning: overseas mortgages and house purchases are not covered by the Financial Ombudsman Service (FOS) or Financial Service Compensation Scheme (FSCS), as those in the UK are. Other countries might have something equivalent but don’t take this for granted – do your research and make sure you understand all the legal protections (or liabilities) you may encounter if buying abroad.

What fees or monies do I have to pay if I’m getting an overseas mortgage?

It is often the case that deposits in other countries are larger than those in the UK. Where it is perfectly possible to get a mortgage with a 5% or 10% deposit here, overseas you may have to pay 30% to 40%, or even more. Consequently, depending on the price of your new overseas home, you could have to raise a significant amount of capital to put down against your purchase.

There will also be additional fees to consider, such as legal costs, valuation and surveyors fees, etc. In some cases, these may be covered or partially covered by the incentives for your mortgage deal, but it’s more likely you will have to pay these yourself.

In addition there are a host of other local fees that may be charged – much like the land registry fees and even stamp duty we have here in the UK. Again, make sure you know what fees apply, roughly how much these will be and when you’ll be expected to pay them.

Finally, be careful about the currency you’ll be paying these and other expenses in. If you pay in Sterling, you will be at the mercy of exchange rates. Instead, it may be a good idea to have an account in the local currency – enabling you to pay fees from this source and avoid any negative exchange rate issues.

Pros and cons of overseas mortgages

  • Having a foreign property could mean additional revenue if you rent it out whilst you are not using it yourself
  • The minimum deposit in some countries can be a lot more than here in the UK.
  • Beware of unexpected charges to transfer money abroad and shop around for the best deal.
  • In some countries, you will pay the same interest rate for the whole term of the mortgage, rather than the short-term deals for two or three years you find here in the UK.

Moneyfacts tip

Moneyfacts tip nigel woollsey

Make sure you have the finance and mortgage offer sorted out before you start house hunting abroad. This way you can avoid having to withdraw an offer on a home you’ve fallen in love with because you cannot obtain a mortgage or funding.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

tropical island

At a glance

  • You can’t use a UK mortgage product to buy a home abroad. You must instead get an ‘overseas mortgage’ – normally from a lender in the country you want to purchase in.
  • Do your research! Find out as much as you can about house purchase fees, taxes and other expenses that you’ll need to pay in addition to the purchase price.
  • Deposits overseas can be a lot more than the 5% or 10% you might pay here in the UK.

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