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.