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.
Remortgaging your UK home to buy an overseas property
Remortgaging your UK home can help you raise the funds to buy an overseas property outright.
Whether this is a sensible option for you will depend on your personal circumstances - including how much of your existing mortgage you've paid off and your current credit rating - as well as factors such as interest rates at the time you apply.
Unfortunately, while the team at Which? Mortgage Advisers are happy to help with remortgaging UK properties, they are unable to advise on overseas mortgages.
Borrowing from a UK bank to buy overseas property
All of the main UK high street banks have an international mortgage service, but you'll need to find out which countries they operate in.
Banks tend to only provide mortgages for purchases in countries where they have offices.
While getting a mortgage in established overseas property markets such as France or Spain might be simple, it may be trickier if you're looking further afield.
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.
Arranging an overseas mortgage abroad
It's possible to arrange a mortgage with an overseas lender using a specialist broker. These brokers can give you tailored information, including a list of estate agents or lawyers to use in your chosen country.
Mortgage rates in some areas of the eurozone are far lower than in the UK, especially in established property markets with a wide range of mortgage providers, so you might get a better deal by borrowing abroad.
However, overseas mortgage brokers are 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.
Video: overseas mortgage vs remortgaging a UK property
In this short video, A Place In The Sun presenter Laura Hamilton discusses the pros and cons of each option for financing a holiday home or let. You can read the full interview here.
Deposits on overseas property
The deposit needed for an overseas mortgage tends to be higher than you'd need for a standard UK mortgage.
In Spain, it's common for overseas buyers to pay 30%-40% of the property price as a deposit.
In some countries the deposit is non-refundable, so don't hand over any money before you've negotiated an initial contract, and then only to a lawyer or bonded estate agent.
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.
You can call them for free on 0800 197 8461, or fill in the form below for a call back. Unfortunately they are unable to advise on overseas mortgages.