How to finance an overseas property purchase, from taking out a mortgage abroad to remortgaging a UK property to free up cash
What is an 'overseas' mortgage?
An overseas mortgage is a mortgage for a property that's not in the UK.
You might want to consider taking out an overseas mortgage if you're buying a holiday home, retiring to sunnier climes or - an increasing trend - buying your first property overseas because you can't afford to buy in the UK.
You can arrange an overseas mortgage through a UK bank or an international lender. It's also common to raise the funds to buy a home abroad outright by remortgaging your UK property.
Here, we explain the pros and cons of each option and some tips to help you get the right mortgage for your requirements
With our unpredictable weather, it's no wonder more and more British citizens are seeking to get a foothold on the property ladder overseas.
Whether you are seeking your own place in the sun, looking to retire in pastures new or simply expanding a property portfolio, more than a million people born in the UK moved to other countries within the EU in the past year alone.
A number of financing options are available to potential overseas buyers, including remortgaging their current property, using savings to purchase outright and obtaining loans from UK or overseas banks.
Here are your options:
Getting a mortgage from a bank overseas
Getting a mortgage as a non-resident is possible, Like high street banks, overseas lenders usually require proof of income (payslip or pension statement), proof of identity/address (passport, bank statement) and evidence of deposit.
Arranging an overseas mortgage abroad
There are a number of large Banks in all towns & cities of Turkey, we work with a number of them that provide mortgages. The general rule is a maximum of 75% of the purchase price with a term of 10 years and an average monthly interest rate of 2% thats around 29% APR
Local Banks offering Mortgages
Max Loan 75%
Max Term 20 years
Mortgages from .91% per month (11% PA)
Max Loan 60% of the value
Max Term 15 Years
Mortgages from 1.24% per month (15% PA)
Max Loan 75%
Max Term 10 years
Mortgages from 1,5% Per Month (18% PA)
RATES QUOTED ARE SUBJECT TO CHANGE
Advantages of getting a mortgage from a bank overseas
They will also have a broader knowledge of local laws governing the mortgage market.
The relative strength of sterling could also make a loan in foreign currency a financially sound decision.
Disadvantages of getting a mortgage from a bank overseas
Higher Interest Rates than can be obtained in the UK
Uncertainty about the impact of Brexit on financial markets puts sterling in a precarious situation. If sterling falls, then loans in foreign currencies in effect cost more of your income.
You won’t receive the same legal protections as you would when using a UK bank - not covered by the Financial Conduct Authority, so you would struggle to get any compensation if you were given poor advice.
You should also consider the repercussions of borrowing in a foreign currency. If you do so, exchange rate fluctuations will affect your repayments
Overseas property mortgage from a UK bank
UK lenders are available but there are at the moment very few offering mortgages in Turkey. Banks tend to only provide mortgages for purchases in countries where they have offices - HSBC being the main one in Turkey, but in areas such as London you have more choices. HSBC tend to operate as an affiliate & do direct you to the local overseas bank. The other main bank offering direct mortgages in Turkey is Isbank which is London Based but can be done by post with them direct.
You can either contact the banks & building societies yourselves or use the services of a broker where you can get quotes from a variety of banks and compare their rates quickly – and potentially have access to more mortgage options.
Borrowing from a UK bank to buy overseas property
Although the mortgage may be set up through the UK bank, you would deal with the foreign arm of the bank once the mortgage had been arranged.
Max Loan amount 80%
Max Term 15 years
Mortgages charged from 7% Per annum
Advantages of taking out a mortgage for an overseas property from a UK bank
Lower rate of Interest
No document translation issues or fees.
Financing in the UK is easier due to your domestic credit record being available, allowing an easier assessment of your financial standing.
Dealing with a company within the UK means you have the protection of regulatory bodies
Disadvantages of taking out a mortgage for an overseas property from a UK bank
Lack of local market expertise.
Higher fees for arrangement
Additional time and effort to visit a UK bank branch when overseas to provide documentation.
For the mortgage brochure & mortgage requirements from Isbank please contact us and we can email them on to you with the local Isbank contact details
Specialised Brokers for Turkish Mortgages
There are a number of specialised lenders for borrowing overseas which can only be accessed through an Intermediary or Broker. It is worth checking at your local UK Estate Agent to see if they have an Independent Mortgage Advisor to provide quotes for lenders such as UCB Home Loans or BNP Paribas that lend in Turkey.
Also specialist overseas mortgage Companies can provide mortgage assistance but they do have minimum loan terms of £75,000 Contact www.mortgagesoverseas.com for more information or contact a local Independent Mortgage Broker
Remortgage or Capital Raising on an Existing UK Property
Remortgaging your UK property is the most common way of acquiring funds to buy overseas. This option may be sensible for you depending on your credit rating and how much of your existing mortgage you have paid off.
Remortgaging your UK home can help you raise the funds to buy an overseas property outright. But be sure to tell your lender that the money will be used to purchase property abroad.
It may be worthwhile to employ a broker if you are unacquainted with the procedures contact Which for personal advice on remortgaging. Otherwise, you can personally get multiple quotes online or via the telephone to find the best deal
Mortgage term can be up to 25 years dependent on age
Loan amount can be anything up to 75% of the value of your UK home (70% with some lenders)
Rates start from as little as 3% per annum, fixed rates etc are available
Advantages of remortgaging a UK property to buy overseas
May provide better interest rates than a regular mortgage.
If you have paid off your existing mortgage you can borrow a larger amount.
The ability to choose a more suitable mortgage product.
Comparatively easier process than using an overseas provider.
Disadvantages of remortgaging a UK property to buy overseas
Having your UK property as collateral will put it at risk if you cannot repay the mortgage.
More stringent lending rules created in 2014 make it more difficult to remortgage.
Very dependent on personal factors, such as current level of equity and home value
Get personal advice on remortgaging to fund an overseas property
Which? Mortgage Advisers is an expert, whole-of-market broker that can advise on the best options for you if you want to free up cash from your UK property in order to invest abroad. Click the Which logo below to take you to their Mortgage page
Unfortunately they are unable to advise on overseas mortgages so we recommend that you contact an independent Mortgage adviser for options on this - if you need help finding one just let us know
And the obligatory you ought to know.........your home may be repossessed if you do not keep up repayments on your mortgage