How to Secure the Best International Mortgage

Summary: Whether you're hoping to join the ranks of those who have purchased a second home abroad or you're an expatriate looking for a mortgage to purchase 'back home,' the task of finding the best international property finance deal can seem like quite a daunting one.

Whether you’re hoping to join the ranks of those who have purchased a second home abroad or you’re an expatriate looking for a mortgage to purchase ‘back home,’ the task of finding the best international property finance deal can seem like quite a daunting one.

Add to this fact the consideration that the average home owner will pay out far more in interest over the lifetime of their home loan than their home actually cost in the first place, and you can see why working to secure yourself the best possible international mortgage or property finance deal now could save you tens of thousands in interest over the lifetime of your loan.

This article will give you a few pointers to make the search for the most ideal and personally suitable finance method that much simpler; and bear in mind that a large part of your search for the best loans and repayment vehicles currently available can be carried out on the internet, making the whole process that much more convenient and time efficient for you.

Step One - You need to understand the different types of finance arrangement that are available internationally in order to determine which one suits you and your circumstances best.

International Mortgages - depending on the country you’re interested in buying property in and on your own personal financial circumstances some home grown lenders offer straight mortgages for overseas property purchase.  HSBC offers mortgages for Britons interested in buying in France for example, Lloyds TSB have a scheme for Britons to raise a mortgage to purchase property in Spain and Barclays Bank offer attractive mortgages for many European countries including Spain, France, Italy and Portugal and they suggest you fill in their enquiry form and they’ll call you back to see how they can help. 

Mortgage types and repayment methods are standard however there is often the added criteria that the purchaser is already a home owner in the UK and mortgages are usually only available for up to 70% of the purchase price.  Buying in this way can remove a layer of confusion and complexity for the interested purchaser as the whole process follows the path they have likely taken for a domestic property purchase, but buying in this way can prove more costly.  Don’t forget either that an international mortgage will likely be secured on the foreign property.

Local (Overseas) Mortgages - it is sometimes possible to raise a mortgage locally in the country you’re buying in.  This is especially the case when one of the larger international banks like HSBC has a subsidiary in that particular country or the country, for example Australia, has close ties with the UK and can access personal credit history etc.  It is important that you make sure you understand the terms and conditions of the loan and the repayment duration and terms as well, not all countries have the same mortgage arrangements as the UK and it is up to you to aware of the terms of any contract you enter into.  Furthermore make sure you check the interest rates available to you and compare them with those available from an international lender ‘back home.’

Expat Mortgages - as an expatriate it can make a lot of sense to purchase ‘back home’ either for investment purposes or as a base for you to return to at some point in the future.  If you do not purchase before you become non-UK resident though it can be tricky to secure a mortgage to buy ‘back home.’ If you had a strong credit history before you expatriated and you are now in receipt of income to support your mortgage application however, there are a number of lenders interested in attracting expat business.  Some of the major high street lenders will charge you a bit of a premium for the ease of application and service they offer and it is worth while shopping round on the internet to see who else is offering specific expat mortgages.

Usually you should be able to borrow up to 85% of the property’s value and when it comes to proof of income this can be made up of earned, pension, investment and rental income.  As a non-UK resident it is very difficult to secure a non-status or self certification loan.

Equity Release or Second Mortgage - this is the simplest and most popular method being used currently for the purchase of second homes overseas.  Because the UK housing market has significantly strengthened over the last 5 - 7 years many people have built up substantial equity in their homes, many are now releasing this ‘extra money’ to purchase property abroad in cash. 

If you consider this method you must accept that the additional sum you add to your mortgage will incur interest, it will have to be repaid over the term or at the end of the term of your mortgage and that the whole loan is secured on your UK home.

Stage Payments - if you purchase property off plan you may have the option to pay for your property via a series of instalments that you can save to fund during the build period.  You will be required to pay a securing deposit up front and then your instalment dates and amounts will be written into the contract enabling you to budget accordingly.  Clearly this method would particularly suit those with a high level of disposable income.

Step Two - If you have decided that some form of international mortgage, second mortgage, local overseas mortgage or expat mortgage is the property finance method most applicable to your personal circumstances the second step is to locate the lender offering the best deals currently.

There are a number of approaches you can adopt...you can search the internet, use forums, expatriate and international property sites, you can examine the lenders’ sites themselves to study what they offer and their terms and conditions.  You can also listen to personal recommendations from friends, family and colleagues who have already undertaken international property purchases.  At ShelterOffshore we have recommended Barclays Bank to readers in the past because they have a depth of local understanding in many overseas locations, they offer a whole range of related and supportive services and what’s more their rates are competitive.  Click here to get in touch with Barclays, they’ll call you back to discuss your needs and how they can assist you.

Of course, Barclays aren’t always the best lender for everyone, and if you find they cannot help you then one of the best methods of alternative approach is to locate an international independent mortgage broker who can take on board your circumstances including the country you’re interested in, the amount you would like to raise and your own personal financial situation, and then apply his expertise to searching the global market-place to find the best possible finance deal to suit you.  Most brokers are rewarded financially when they secure your mortgage by the lender you decide to go with, but ask up front about whether you will have to pay the broker a fee.

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