How to get a mortgage to buy property abroad 

Getting a mortgage in your home country is often a tricky enough process as it is. When you add geographical distance and a language barrier to the mix, it can become even more of a maze to navigate.

Different countries have different rules and regulations that you’ll need to understand, and financial planning is essential. You may also need to get local advice from financial or legal experts and take currency exchange fluctuations into account.

To help guide you through the various steps and key considerations, we’ve created this article on getting a mortgage on a property abroad.

Researching local regulations

Thoroughly researching the legal and regulatory landscape of your desired property destination is paramount before embarking on securing a mortgage.

For example, in Spain mortgage requirements include proof of stable income, a minimum down payment, and variable interest rates tied to the Euribor index. In the USA, if the property isn’t for a business, you can be taxed up to 30%.

In Australia, the process can be more complex. Some Australian banks may even refuse to provide a mortgage to you as an expat or foreign investor, meaning you’ll have to depend on a local bank. In addition, non-residents generally cannot buy resale homes in Australia.

The best thing to do is to read up on the regulations in your country of choice as early as possible.

Later down the line, you may want to hire an experienced advisor, such as a mortgage broker or financial advisor. They can provide you with tailored information and valuable expertise, helping you navigate potential legal complexities and ensure a smooth property buying process.

Choosing a lender

The two main methods for getting a mortgage for an overseas property are to take one out with a bank local to you or to arrange one with a lender in the country you’re choosing to move to.

Get an overseas mortgage from a local lender

Some local banks offer international services, allowing you to secure a loan for an overseas property in your country of residence. This can enable you to arrange the mortgage in your own language and potentially save money on translation fees.

Furthermore, a local lender is more likely to have access to your credit history, which can also help to simplify the process. However, they may have less experience of the buying process in your country of choice, which could create some hurdles.

Get a mortgage with a foreign bank

Another option is to arrange a mortgage with an overseas lender through a foreign bank or a specialist broker.

This can be a good route to pursue as an overseas lender is likely to have a greater knowledge of the local laws and buying process.

Furthermore, they may be able to help you secure a better mortgage deal due to their proximity to the market. And you may be able to get a better interest rate.

However, it can be difficult to get a mortgage overseas in some countries. You may need to meet certain eligibility criteria, such as having a large deposit, and the interest rate could be higher for a foreign buyer than it would be for a local.

In addition, there could be additional barriers, such as different time zones and languages. If you do opt for an overseas lender, it’s best to hire a trusted, independent translator.

Financial preparation and documentation

You need to be mindful of the documentation you’ll need when applying for a mortgage, alongside any financial preparation.

Building a solid financial profile is essential to improve approval prospects and secure favourable terms, wherever you choose to buy.

This involves maintaining a healthy credit score, managing debt responsibly, and demonstrating stable income and savings. A larger down payment can further bolster your position and potentially lead to better interest rates.

In terms of documentation requirements, this can vary from country to country. However, most lenders around the world will require things like proof of income and identification, credit history, and home or health insurance.

Seeking guidance from local experts and advisors

Hiring reputable experts, such as a lawyer and a financial advisor, is strongly recommended when trying to apply for a mortgage on an overseas property.

These professionals bring specialised expertise to the table, guiding buyers through the intricacies of the market. Their insights help streamline the process and can secure you a more favourable deal. They can also help minimise the risks associated with fraud and unfamiliar legal and financial landscapes.

Expatica is an excellent resource, featuring a directory to find anything and everyone from accountants to estate agents. The UK government website can also help you find English-speaking professionals abroad, including lawyers and translators.

A lawyer is essential in helping you navigate the legal complexities of the sale, while a mortgage broker could secure you a much better deal with a reputable lender.

Meanwhile, a financial advisor can help you review your tax arrangements and plan your budget effectively.

Comparing mortgage options and terms

Shopping around and comparing offers from various lenders is crucial when seeking a mortgage for property abroad.

Each lender may offer different terms, interest rates, and fees, so it’s essential to explore multiple options to find the most suitable deal. This approach allows you to make informed decisions based on your financial needs and preferences.

If you decide to use a mortgage broker, they should be able to help you compare the options available and find a deal that suits you.

Planning your overseas money transfers

If you’re buying property abroad , it’s highly likely you’ll need to send money abroad. This may be for travel expenses, a large transfer for a down payment, or regular transfers to service an overseas mortgage.

Currency markets are highly volatile and ever-changing, so it’s best to consider seeking out a currency broker to help you navigate the volatility.

Here at Currencies Direct, we offer a range of services that can help you keep costs low and make your money go further.

For instance, you can set up a forward contract with us. For a small deposit, you can fix the current exchange rate for up to a year. This keeps you covered from any market volatility which could affect your budget while you find a property and apply for a mortgage.

Additionally, we offer automated regular payments, making it easy to pay bills abroad, service your mortgage, or transfer monthly pension payments. You can even combine a forward contract and regular payments, so you know exactly how much money you’ll get for each transfer.

With 24/7 support available through our app, we’re always on hand to give you guidance or answer any queries.

Alternatively, you can also get in touch with our team through email via customer.s@currenciesdirect.com or call +44 (0) 20 7847 9400.