Mortgage for property abroad

whiskymincher

Looking to purchase a property in the sun. Looking to fund via equity release from main house in UK. Will not be letting the property in the sun out, purely for family holidays/investment purposes. Currently have a house worth circa £250,000 and a repayment mortgage of £112,000. Budget for house in sun circa £100,000. Is this do-able?

homer_j_3

Clearly you can remortgage your house to a point and this is limited by equity and affordability/lenders income multiples.

There are other considerations to make when you are buying like the additional costs for legals etc that may be incurred.

If you have no probs with giving us your income details required for the new mortgage and if you have any debts, a list of these too, then we can have a look for you.

The alternate option is to release enough for a deposit and mortgage the property aborad (if poss) - there are more considerations here and in any event you should seek professional and legal advice

whiskymincher

Hi Homer and thanks for quick reply. Have researched and reckon on adding 10% to any purchase price to cover buying a place in Spain. My thoughts are that for roughly the same amount I am paying now on a repayment mortgage I could add the extra £100,000 and take out all on an interest only and be paying roughly the same monthly cost. I understand that at the end of term I will not own either property but in 20 years time would be extremely disappointed if both had not appreciated significantly. If went ahead would have assets today worth £350,000 against a mortgage of circa £225,000, around 65% of the asset value. Aim is to make equity work for us and get some enjoyment.

missile

Mortgages in Spain are cheaper than UK. Having said that you may need to review your budget. £100K may get you a small appartment or an old finca in need of restoration but not that dream house on the Costas

homer_j_3

If there are 2 people being named on the mortgage then I would expect that you would need to be bringing home around 75k for income multiples, if you are under this then not to worry but I am just working off 3 x joint income.

If you have debts then this may affect your affordability. I would seek advice and get the broker to run some scenarios.

Remember that it is all well and good having 65% LTV over 2 properties but you are putting your main residence at risk by securing everything against it. Clearly there are risks in securing a mortgage against your spanish property in currency fluctuations and this why you should make sure you get all the advice you can

whiskymincher

Homer - take your point and the income multiple would be more likely 3.5, however my view is that there are undoubted risks however taking the long view which is what this scenario represents I am looking at paying the sameish monthly outgoing but for two properties.
Missile - Take your point and we are looking at something like a two bedroom appartment or town house on one of the more affordable Costa's

herbiesjp

As Homer_j rightly says you have to go into this with your eyes open, and from your responses it sounds that you know exactly what you are doing and the risks that are involved.

As for whether it can be done, the simple answers is yes - as long as you fi the criteria of the available lenders to you.

homer_j_3

whiskymincher wrote:

Homer - take your point and the income multiple would be more likely 3.5, however my view is that there are undoubted risks however taking the long view which is what this scenario represents I am looking at paying the sameish monthly outgoing but for two properties.
Missile - Take your point and we are looking at something like a two bedroom appartment or town house on one of the more affordable Costa's

That is great that your income will help you achieve your goal. The risks with having money secured on your home wasnt really about an increase in cost to you for the additional borrowing but more like the issues that can be sometimes beyond our control like loss of an income. Just ensure that you make sure that you are as well protected as you can be.