Are you looking to buy a home abroad? We answer all the key questions so you know what to expect when applying for an overseas mortgage.
Please note that this page is for guidance only. Better.co.uk does not currently supply overseas mortgages.
What is an overseas mortgage?
An overseas mortgage is when you get a mortgage for a property that’s not in the UK.
You might get an overseas mortgage if you want to:
buy a holiday home abroad
move abroad when you retire
buy a home abroad to live in
Please note that Better.co.uk does not offer overseas mortgages.
How an overseas mortgage works
Each country will have different rules for overseas mortgages. A specialist overseas mortgage broker or lender can help you understand the process.
Differences with getting an overseas mortgage may include:
not being able to borrow as much
being fixed on the same deal for most of the mortgage term instead of remortgaging
having to put down a bigger deposit. In Spain, you’ll need a deposit of 30 to 40%.
Some deposits are not refundable. So check you’re happy with your contract before paying your deposit.
To buy a house abroad you can:
remortgage your UK home to buy a home abroad outright
borrow from a UK bank that has an international mortgage service
arrange your mortgage from a bank overseas
Risks when buying a home abroad
There are risks when buying a home abroad. Particularly if you’re getting a mortgage from a bank overseas.
Risks of buying a home abroad include:
having repayments change due to changes in the exchange rate
charges for transferring money abroad
missing payments and fees that you might not know you have to pay if your taxes change
penalties and legal action if you do not follow the local property laws
not having the protection of the Financial Conduct Authority (FCA). In the UK you’re covered by the FCA if you get bad advice
It’s best to do a lot of planning before you decide on an overseas mortgage.
Choosing a mortgage provider based in the UK or with an international branch is less risky.
If you’re using a provider outside the UK, preparing can help protect yourself of the risks.
To reduce the risks:
check local property law in the country you’re buying
find out what taxes you need to pay and check how they may affect the tax you pay in the UK
check what other costs there are like international bank transfer fees and/or translator fees
check if you’ll need planning permission if you plan to adapt or alter the property
get an interpreter you trust if you’re not fluent in the local language
get a solicitor that specialises in international transactions and conveyancing. It’s best to find one that’s registered with the Law Society in the UK. Make sure they are fluent in English and the local language
Talk to a specialist international broker or adviser for advice about overseas mortgages. Trussle does not currently offer overseas mortgages or advice on overseas mortgages.
Benefits of buying a home abroad
Buying a home abroad means learning another country’s processes and rules. But there are also benefits.
lower mortgage rates in some areas of Europe, so you could get a better deal
earning money by renting it out
being able to split your time in different countries
saving money on holidays
making a profit when you sell, if you buy in an area where property values are going up
Lenders for overseas mortgages
Most UK high street banks offer overseas mortgages and advice.
Some UK lenders have international branches that can help you get an overseas mortgage. This depends on the country you plan to buy a house in.
There are also specialist overseas brokers.
Brexit and buying abroad
You’ll still be able to get an overseas mortgage after Brexit, but there may be some changes.
We could see changes in things like:
Countries popular with expats like Spain and France are unlikely to try to make it harder for expats to buy abroad.
Buying and owning a holiday home abroad should also not change much after Brexit. Anyone can get a mortgage in Spain as long as they have good credit.
You’ll still be able to rent out your holiday home, you do not have to be an EU citizen to do this.
There may be some changes if you’re no longer an EU citizen.
In some countries:
non EU citizens are taxed more
EU citizens can borrow more
There has been a slight drop in British people buying property abroad in places like Spain since Brexit.¹
Brexit has not affected property prices in countries like Spain.²
You'll have the same rights as EU citizens if you register as a resident. You can register if you’ve lived, worked or studied in the EU before 31 December 2020.
There are still discussions as to if British citizens living in the EU will be able to move to other EU countries after the Brexit transition deadline.
Your pensions and benefits will stay the same if you were already living in the EU before 31 December 2020.
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¹ Property Reporter: How does Brexit affect people wanting to buy property in Spain?
² Property Wire: How does Brexit affect people wanting to buy property in Spain?