Insuring your property abroad

The trend of investing in property abroad is increasing in the recent years. Investing on Property Abroad is a huge decision and has to be made cautiously. So many pros and cons have to be measured and gauged before investing in property abroad. A number of investors find it as a profitable long term investment. Investors are interested on overseas property as it serves as holiday home during vacations and also earns rental income for the owner. Most of the overseas property owners are financed through overseas mortgages. So, you cannot afford to damages caused during construction or other calamities without proper insurance abroad. Your property is subject to high risk and it is highly essential for you to insure your overseas property.

There are different kinds of insurance available with different clauses. Property insurance protects your property or assets against physical loss or damage.

Many properties for sale abroad come with a lot of insurance schemes. Generally, insurance for property abroad covers four essentials such as, the property, personal belongings, liability protection and additional living expenses in case if the property owner is unable to take care of his expenses temporarily. Building Insurance includes buildings, garages, swimming pools, terrace, gates, fence, water tanks and others.

Some benefits of insurance:

• Your overseas property will be fully protected even if it is not occupied.
• Your building insurance abroad will protect your property from natural calamities like fire, flood, earthquake, etc and accidental calamities such as theft, falling objects, etc.
• Public Liability Insurance is automatically included. This protects both the property owner and the tenant. This policy also protects you against any legal action from the injured tenants or third parties.
• In some countries, it is essential to have Employers Liability Insurance for owning a property abroad. This cover will also protect the property owner against the legal action, in case or accidents or injury caused.
• Additional coverage such as contents insurance abroad will cover everything from carpets to costly furniture and electrical appliances.
• Malicious damages, burst oil pipes, water tank repairs, sanitary fitting are covered under insurance.
• Additional living expenses while in your overseas property such as travel costs etc are provided if the policy holder is unable to take care of his expenses temporarily.
• Many insurance policies cover loss of rent following the damage caused.
• Title Insurance will protect you against the cost of legal liabilities that arise over ownership disputes.
• Generally, a property owner’s insurance will not cover a tenant’s property or his belongings. So it is recommended to tenants to have tenants insurance which will cover the damages caused to his property abroad and protect his overseas property.

However one has to be careful in choosing an insurance policy. It is highly recommended that international movers understand the clauses clearly before entering into a policy. Foreign investors and international movers can claim for their policies available in English for better understanding. Adequate overseas property insurance has to be covered. Estimation of coverage should include rebuilding costs, clearing costs, costs incurred in hiring professional help etc. Higher valued items such as jewels, antiques, furniture requires proof of security and certificate of authenticity to claim.

Financing a property abroad

With the easy availability of overseas mortgages, buying international property has become simpler. Investing on overseas property has become one of the most potential and profitable financial ventures. There are several advantages in making investment on property abroad. Some of them are:

• Overseas property can be used as holiday homes or second homes.
• The market price keeps rising in most of the places. Hence an asset abroad is always valuable.
• High return on investment.
• Regular rental income
• Tax reduction is there while buying a property abroad for sale

Mortgage can be claimed to finance property abroad either from the country of your residence or can be claimed from the bank situated in the country you wish to purchase. Most of the banks have branches in and around countries like France, Spain, Italy, Portugal, Florida, South Africa, Australia and New Zealand. These banks encourage foreign investors to make investment on property abroad by offering several overseas mortgage plans.

Overseas mortgage is offered based on the value of the property. A bank’s representative will valuate your international property and quote the eligible amount. It also depends on whether the applicant is a resident or non resident. One could normally claim around 70%-80% of the property value as mortgage. In few countries, banks lend even up to 100% mortgage on overseas property. The loan repayment period, in such countries, generally varies from 5 to 30 years. While availing finance for property abroad, it is necessary to claim mortgage including all hidden costs as it is difficult to claim more once the initial paper work is completed by the bank.

Overseas Mortgages are available based on the applicant’s credentials. The essential documents might differ for a resident and a non-resident. It normally takes around 2-8 weeks to complete the bank’s process and claim mortgage for buying your international property.

Mortgages are available for all kinds of property abroad for sale like studio apartments, villas, off-plan properties, buy-to-let properties, resale properties, leaseback properties etc. However, mortgage interest rates and mode of payment might vary depending on the property type and the bank. The type of property plays an important role in claiming mortgage or finance for a property abroad. In some countries, mortgage for off-plan properties are available only after the completion of the project or property. In other cases, mortgage amount is lent by the bank subsequently as the property develops.

Most of the banks offer both variable and fixed rate for overseas mortgage. Generally fixed rates are higher than variable rates. Financing a property abroad is done by either local currency or foreign currency. One has to carefully compare and claim mortgage as the rates might differ from country to country depending on the money value. For example, a few European countries have higher interest rates than the others. It is always advisable to have a local broker while applying for mortgages for your international property. He would certainly be a useful source of information to help you with local procedures. They can help you to get the best deal with low interest rates. Brokers typically charge from 1% – 2% as brokerage fee.

AN OVERSEAS SECOND HOME AS INVESTMENT PROPERTY ABROAD

Property investment overseas is a long term benefiting venture. The asset purchased is always profitable and you as a buyer should never consider your overseas property as passive investment. For, it can serve as one of your best investment property abroad.

In the 21st century people are exploring every possibility of investing in the real estate industry. In the recent years there has been a lot of hype about buying property for sale abroad. As per the statistics of real estate agents, about a million of British people own a home in other European countries. With the changing trends, there is a growing interest in overseas property for sale.

With many people moving abroad for vacation, it is convenient if you buy a property in your favourite destination. The survey result of National Statistics shows that around two hundred thousand UK people travel abroad to find a second home – and make an investment in property abroad.

When you decide to buy a home abroad, there few important things you have to consider. The following may be of help for making a good investment and finding the right overseas property for sale.

• Where to buy - The first and foremost thing is to decide where to buy the property. Your investment property abroad can be made in any country, so it is wise to choose the country first and then proceed further. It is better if you make your investment in your most favourite destination.
• Location – The next important thing is to choose your locale. It may a country house, a town apartment or a beach side villa. The vacation home is going to be one of your ideal getaways. Hence it is important to choose the right place. In case, if you are moving abroad for business prospects or investing just for the sake of rental income, it is always better to invest in town property.
• Budget – The amount the buyer is willing to allocate for his investment in property abroad. Overseas property for sale can vary from ordinary house to luxury villas. So, the buyer has to fix his/her budget first before investing in property broad. The amount required for the property can be availed even from overseas mortgages. The mortgages ease you of financial worries and help you make a successful investment. There are several mortgage plans available. You have to choose one that fits you best.
• Access to the city – The buyer has to decide upon the accessibility to their neighbours. This is crucial because investment property abroad can yield more rental income if it is within accessible limits to cities.
• Size – The size of the property has to be decided. It can be one bed room or multi-bedrooms apartment or individual building or villa. The size is proportional to your budget. It is generally advised to look for a property that does not exceed your budget or financial limit.
• Rent –Property abroad is always not a first home, so buy to let property abroad can be considered. This is a rewarding business venture as the property will earn you regular rental income. In this way, your overseas second home will become an investment property abroad.

These are the initial questions to which answers have to be found before entering into a deal with regard to your overseas second home or investment property abroad. When you are applying for overseas mortgages, it is always advisable to read through the legal proceedings of the country and especially the region where the property is located. Banks can also help the buyer in this regard. But the investor has to be aware of the interest rates and the insurance schemes before investing in property for sale abroad.

When you consider your second home as vacation home, then it is better if you plan to let out your property for rent. Buy to let property abroad is always worthy as it generates good income. Popular holiday destinations especially can yield value for your money. Hence by investing in buy to let property your overseas second home can be a resourceful investment property abroad.

INVESTMENT PROPERTY ABROAD: BUY TO LET

When someone invests money on buying a property and lets it out for rental it is termed as ‘Buy to let property’. Chiefly, buy to let property is bought as overseas property and serves as both a holiday home and as regular source of income.

Buying property abroad has become a good investment venture for the following reasons:

• It is a long term investment
• Non-residents wish to buy property and use them as holiday homes
• It saves tax deduction
• It yields regular rental income

Due to the above mentioned reasons, there is a higher demand for overseas property. Investment property abroad also thrives because of the government’s supportive plans and benefits. It has been made easy for a non resident to buy property as it serves as a source of foreign investment in their country. All one needs to buy property abroad is a fiscal or tax number, regular source of income, an account in the local bank and a valid passport.

The property can be an off plan or a resale property. An off plan property is a new development which is bought from a property developer or property management company. It is a property that is sold based only on the development plan of the property. A resale property is a used property which is bought directly from the owner. Both off plan and resale property markets are high.

Investment on property abroad has been made easier with the availability of mortgages from banks. Based on the value of the property one can secure loan for buying it. A bank representative evaluates the property and fixes a value for it. One can generally secure upto 80% of a property’s value. In some countries, few banks offer even 100% mortgage for property investment. This percentage might slightly vary for a non-resident. The loan period might also vary from 5 years to 30 years approximately.

Most of the banks offer international mortgage and encourage investments on property abroad. Most of the banks which have branches in France, Spain, Italy, Portugal, Florida, South Africa, Bulgaria, Australia and New Zealand finance for investment on overseas property. Overseas mortgage is easily available from these banks.

Mortgage is available for all kinds of properties such as studios, villas, apartments, leaseback and buy to let properties which might be off plans or resale properties. However mortgage interest rates and the method of payment might vary according to the type of property and the place of investment. For example, for off plan property the loan is available only after the completion of the project.

It is always advisable to have a legal representative during overseas investments. As it is essential to run a background check on the property and other legal documents like whether there is any unpaid mortgage on the property, debt, etc. In addition, the legal advisor can take care of insurance, tax payment and maintenance on behalf of the owner in his absence.

Buying overseas property is a biggest investment one can make. In most of the countries the availability of property is lesser than the demand, thereby creating a seller’s market.

Postings coming soon...

Are buying a property abroad? Do you plan to move to overseas permanently or are you looking for a second home or investment property abroad. Starting the first of December 2007 we will have a monthly post, full of tips and tricks when buying overseas property.