Buying a home abroad is an exciting investment opportunity. But there’s also a lot to think about. If you’re on the fence about taking the next step, we’re here to help.
We’re going to take you through some of the key benefits of having a home abroad, how to buy one and the basics to look out for if you’re considering the investment.
The benefits of having a home abroad
A holiday home all year round
Some people fall in love with a particular destination, and find themselves travelling there every year. If that’s the case, you could save money by investing in your own home there. That way, you’ll have somewhere to stay in your favourite home away from home, all year round.
You could also use this investment as an opportunity to relocate, whether it’s partially or permanently.
Extra income opportunities
In some countries, investing in a buy-to-let property might be more affordable than it is in the UK. According to Home Search Overseas Ltd, a growing number are investing in properties abroad purely for the return on investment. They are tempted by developments promising guaranteed annual yields of 6% or 7%.
A worthwhile investment
Similarly to a UK investment, if a local area does well and house prices increase, you may be able to sell at a higher value than the original price.
If the investment is long-term, time spent on renovating and developing the property into a lovely holiday home would also increase its original value.
How to buy a home abroad
There are several ways you can buy a home abroad. They may be different to buying a home in the UK. Check out our earlier news article to find out more.
Cash might be a viable option for some investors, particularly if the property prices are lower in the countries you’re interested in.
There are other options available too. For example, you might be able to remortgage your current home. However, it’s recommended that you consult the advice of a mortgage adviser before you remortgage your property, to ensure that you’re taking the right steps.
What to watch out for
We’ve included a list of things to look out for when you’ve invested in a property abroad. Including:
The exchange rate
Exchange rates may fluctuate unexpectedly. Make sure you consider it as it can make your property purchase suddenly become cheaper, or more expensive. For a British buyer, remember that if the pound goes down, the foreign property price effectively goes up.
If you’re paying from a British bank account, fluctuations in exchange rate will also impact your mortgage payments. It’s important to stay aware of exchange rates so that you can be prepared if a fluctuation comes your way.
You’ll probably need to pay for the property in the country’s local currency. Make sure you
check the fees and exchange rate for money transfers.
Property taxes
Property taxes will be different from country to country. Make sure you’re aware of what you need to pay and when according to the country you’re investing a property in.
If you’re renting the property out, you’ll have to pay tax on the income, and when you sell there’ll be capital gains tax, unless the property is your main home. In most cases, international agreements known as double-taxation treaties exist to ensure that you aren’t taxed twice – at home and abroad.
Expert mortgage advice when you need it
If you’re considering a property abroad, get in touch to see if your dream can become a a reality. Our mortgage advisers in Newcastle offer a free initial no-obligation appointment to provide the right advice for your needs. Find out more by calling us on 01914 018229 or send us an e-mail.
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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