With the easy availability of overseas mortgages, buying international property has become simpler. Investing on overseas property has become one of the most potential and profitable financial ventures. There are several advantages in making investment on property abroad. Some of them are:
- It is a long term investment.
- Overseas property can be used as holiday homes or second homes.
- It saves tax deduction.
- It yields regular rental income.
- High return on investment.
Due to the above mentioned reasons, there is a higher demand for overseas property. Investment property abroad also thrives because of the government’s supportive plans and benefits. It has been made easy for a non resident to buy property as it serves as a source of foreign investment in their country. All one needs to buy property abroad is a fiscal or tax number, regular source of income, an account in the local bank and a valid passport.
The property can be an off plan or a resale property. An off plan property is a new development which is bought from a property developer or property management company. It is a property that is sold based only on the development plan of the property. A resale property is a used property which is bought directly from the owner. Both off plan and resale property markets are high.
Investment on property abroad has been made easier with the availability of overseas mortgages from banks. Mortgage can be claimed to finance property abroad either from the country of your residence or can be claimed from the bank situated in the country you wish to purchase. Most of the banks offer international mortgage and encourage investments on property abroad. Most of the banks which have branches in France, Spain, Italy, Portugal, Florida, South Africa, Bulgaria, Australia and New Zealand finance for investment on overseas property.
Overseas mortgage is offered based on the value of the property as well as the applicant’s credentials. A bank’s representative will valuate your international property and quote the eligible amount. It also depends on whether the applicant is a resident or non resident. One could normally claim around 70%-80% of the property value as mortgage. In few countries, banks lend even up to 100% mortgage on overseas property. The loan repayment period, in such countries, generally varies from 5 to 30 years. It normally takes around 2-8 weeks to complete the bank’s process and claim mortgage for buying your international property. While availing finance for property abroad, it is necessary to claim mortgage including all hidden costs as it is difficult to claim more once the initial paper work is completed by the bank.
Mortgages are available for all kinds of property abroad for sale like studio apartments, villas, apartments, off-plan properties, buy-to-let properties, resale properties, leaseback properties etc. However, mortgage interest rates and mode of payment might vary depending on the property type and the bank. The type of property plays an important role in claiming mortgage or finance for a property abroad. In some countries, mortgage for off-plan properties are available only after the completion of the project or property. In other cases, mortgage amount is lent by the bank subsequently as the property develops
Most of the banks offer both variable and fixed rate for overseas mortgage. Generally fixed rates are higher than variable rates. Financing a property abroad is done by either local currency or foreign currency. One has to carefully compare and claim mortgage as the rates might differ from country to country depending on the money value. For example, a few European countries have higher interest rates than the others. It is always advisable to have a local broker while applying for mortgages for your international property. He would certainly be a useful source of information to help you with local procedures. They can help you to get the best deal with low interest rates. Brokers typically charge from 1% – 2% as brokerage fee.
It is always advisable to have a legal representative during overseas investments. As it is essential to run a background check on the property and other legal documents like whether there is any unpaid mortgage on the property, debt, etc. In addition, the legal advisor can take care of insurance, tax payment and maintenance on behalf of the owner in his absence.
Buying overseas property is one of the biggest investment decisions one can make. In most of the countries the availability of property is lesser than the demand, thereby creating a seller’s market.