Is This the Biggest Mistake People Make When Buying Property Abroad?

We Britons are famed for leaving our brains on the plane when we venture abroad to buy property – we lose all commonsense at the first sight of a sea view and are signing on the dotted line the minute a swimming pool is mentioned.  And as a publisher that places a fair amount of emphasis on examining real estate prospects and opportunities abroad, we’ve heard more horror stories than most about people who have ventured forth and bought a home overseas without doing any homework.

You might think that failing to sort out your mortgage and finances ahead of a purchase abroad is the biggest mistake that people make, or perhaps buying off plan from an untested developer is the most significant disaster that befalls people – but no, in our opinion, and from what we’ve seen, heard and even witnessed, the biggest mistake that people make when buying property abroad is far, far worse than that!

In this report we’re going to highlight the many mistakes that people potentially make when buying a home overseas – so that you can avoid the same perils and the pitfalls.  And we’re going to introduce you to what is potentially the biggest mistake that anyone ever makes when committing to an overseas home purchase.  We think you’ll agree, it’s pretty big and it’s pretty devastating.

Thinking that Money Doesn’t Matter – Big Mistake

This can be sub-divided into: -

Failing to Fix Finance Ahead of an Offer

Very few British lenders now offer finance on overseas purchases – Abbey being an exception in Spain and Barclays offering a few choices but often only for expatriate customers.  What’s more, thanks to the credit crunch, (bored of that term yet?  We are!), mortgages are harder to come by full stop – even if you have plenty of equity in your home and you want to remortgage to release it.  So, you have to have your finance sorted in advance of a trip abroad to buy – and you need to have an agreement or approval in principle for your mortgage so that you know how much you will have to spend.  Yet often buyers still think that it will be very easy for them to fix finance and go ahead on a viewing trip with no real idea of how they’re going to find the funds they need.  This is not a good idea!!

And

Blowing the Budget!

With an idea of what you have to spend in mind, you need to stick to it!  If you’ve gone ahead and sorted out your finances in advance, gone to the trouble of getting an agreement in principle, crunched the numbers and raided the piggy bank, don’t let some dodgy, smooth talking estate agent show you – let alone talk you into buying – a property over your budget.

Oh – and don’t forget that your budget also has to cover the fees, taxes, commissions and charges associated with your purchase which can run from 10 to 20% of the original purchase price depending on where you’re buying.  If you blow the budget you will be overextended and in a precarious position from the start, and you could undermine the security of your purchase with devastating consequences.  You have a budget, so stick to it rigidly.

Being Blinded by the Sun – Bigger Mistake

You have to do your own personal and in-depth research into whether a given nation, a given location and a specific property are right for you.  This has to be a concerted effort on your part to ensure that your chosen property abroad ticks all the important boxes.  Is it in a stable country, is it in a good and accessible location, is it well built, are you buying what the estate agent has shown you, or do the title deeds say something else entirely?

A great deal of effort needs to go in to your research and you have to make sure that you approach the purchase with commonsense and caution – as you would a purchase of a home in the UK.  So why then are so many Britons seemingly blinded by the sun as soon as they step off the plane – to the extent that they buy off plan, unseen, they sign up to buy something they haven’t investigated or even opt for a home in a land they have never visited or only seen for two weeks on holiday.  Madness.

Thinking You Can Go it Alone – Even Bigger Mistake

Would you buy a house in the UK without having it checked out through a survey and without having a solicitor on board to undertake checks on the title deeds, to do your conveyancing, work on your behalf and secure the sale for you in a safe way?  No, not unless you were mad you wouldn’t.  So why would you buy a property abroad without insisting on the same checks and the same professionals to work on your side?

Just because it may not be the way the estate agent claims it’s done in the nation you want to buy a property in does not mean that it cannot or should not be done.  Get an independent survey done of the property and the land it sits on, get an independent solicitor, i.e., one not associated with the vendor/developer/agent, and make sure they check everything out.  Is the vendor allowed to sell the property, are there any debts or liens associated with the property, is it structurally sound?

These are all questions you need to have answered – so get the professionals on side to support you.

Forgetting the Ongoing Financial Factors – The BIGGEST Mistake of All

The dream of owning a home in the sun, a retreat by the sea, an investment property in a holiday hotspot goes as far as the reality of finding that property, purchasing it, perhaps furnishing it and spending the first of a long line of planned holidays in it.  It goes no further.  Perhaps you may be wondering what we’re on about – but you see, once you’ve bought a property abroad and you’ve got your place in the sun, it will cost you money to keep it.

What’s more, it will cost you money to sell it…

And this is the biggest mistake that people make – they forget that there will be annual taxes and fees and costs associated with owning a home abroad.  You will have to pay property tax, electricity costs, you may have to pay someone to look after the home when you’re not there.  You will need to insure it, maintain it and the costs will never end – not even when you come to sell it.  You may well have to pay capital gains tax at home and abroad, you will have to pay your estate agent, you may well have to pay to get the house looking nice if it is not up to scratch when you come to sell.  You will need to pay for a solicitor again, perhaps an accountant to sort out your tax liability, you will need to pay to ship goods back to the UK and the bills will keep on rolling in until your dream home abroad belongs to someone else!  And this is the BIGGEST mistake that people make – they forget that the property they buy abroad will continue to cost them!

Don’t make the same mistakes as those listed above – be a savvy buyer!