Foreign Property Mortgages Management

If you are considering buying a holiday home abroad and you don't have your suit cases packet full of cash then you will need to consider alternative means of funding your purchase. Just like buying any property you can take out a loan in the form of a mortgage to assist you in raising the money required.

Buying a home abroad isn't always as simple as it sounds and you may have overlooked some of the inevitable complications associated with this kind of purchase. A lot of people spot an area they want to live in or even a property they would like to buy when they are on holiday; at a time when you are away from work and the stresses of your day to day life at home you may be a little less capable rational decisions than normal. Researching the location you want to buy in, the property markets and the travel arrangements should help to give you a bigger picture and help you decide whether you really do want to commit.

Have you considered what the location of your property is like in the winter? The place may be delightful in the summer but what happens in the off-season and what impact could the winter climate have on the property? Do you really want to go on holiday to same place every year? Is it convenient and financially viable to travel regularly to and from your second home?...All these things should be considered.

Thanks to the economic growth in Britain property tends to generally increase in value year on year but this may not be the case for property price trends in foreign climes, so it may be best to rent out your property when you are not using it in order to fund the upkeep of the property and to replace profits that you otherwise might gain from it's capital.

When you are shopping for a mortgage to fund the purchase of your property abroad there are several options available to you that you may want to consider:

• The first option is to extend the mortgage you have on your existing property, this can be a cheaper way to fund the purchase of a foreign property; but don't forget that if you can't keep up with repayments you might lose both properties as a consequence.
• The second option is to take out a secondary mortgage especially for your second property. There are quite a few companies and high street lender that will offer services specifically designed for buying holiday homes outside of the UK, you should compare rates between as many as you can to ensure to get the best deal at a competitive rate.
• Another option that you may want to consider is taking out a mortgage in the country that your holiday home is located. This will involve taking a loan in another currency and there are some risks associated with this kind of commitment. For instance the conversion rate; if the currency in question moves against the pound you could end up paying more for your mortgage. If you do take this option you will need to study closely past trends in currency fluctuation and asses the risks accordingly.

There can be hidden costs when buying a property abroad which you may want to cover with the loan but this will increase the amount you will have to borrow and of course pay back. You should take into account legal fees, valuation costs, taxes, and currency conversion fees.

If you don't fluently speak the language of your chosen destination you may also have to pay for a translator to serve as a middle-man for negotiations with foreign estate agents and so on. Don't forget also the costs of maintaining and insuring your home abroad, you may require specialist insurance for liability etc if you are intending to rent out your home especially if you are intending on hiring any domestic staff.

The list of expenses can be long and all these factors will have an effect on how much you can afford to pay back on your second mortgage. The key to success is to look well ahead and plan for every likely financial eventuality.

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