Mortgage for purchase of 2nd home overseas

JustAnotherBayesian

Hi all, I purchased my home for cash several years ago. It is currently valued at £350,000. I now want to buy an overseas property for approx £ 150,000 and I have £75,000 of this in cash. Hence I would like to get a loan for the other £75,000. My income is £32,000 gross, I am 45 years old and I currently have no debts. I have made some inquiries and found that a loan secured on only the overseas property will be close to impossible (for one thing it is being bought off the plan, with construction not yet complete) so I was advised to look into the options for Taking out a loan secured on my UK house. Could anyone advise options for this ? Thanks.

jaybeetoo

I'm not sure what you are asking.

What do you mean by options? Are you referring to the types of mortgages available (e.g. Repayment, interest only)?

Could you be more specific please?

JustAnotherBayesian

jaybeetoo wrote: »

I'm not sure what you are asking.

What do you mean by options? Are you referring to the types of mortgages available (e.g. Repayment, interest only)?

Could you be more specific please?

Sorry. I would be looking for a repayment loan. When I enquired at my bank just now (barclays) they told me what I needed was an equity release mortgage or homeowner loan but they don't offer those, but they could introduce me to another company that could (freedom finance). I generally feel cold towards deals that involve "introductions" so I would like to know what people here would advise....

GMS

If you have no mortgage on your property then raising on this is probably the easiest way.

Speak to a broker.

holly_hobby

JustAnotherBayesian wrote: »

Hi all, I purchased my home for cash several years ago. It is currently valued at £350,000. I now want to buy an overseas property for approx £ 150,000 and I have £75,000 of this in cash. Hence I would like to get a loan for the other £75,000. My income is £32,000 gross, I am 45 years old and I currently have no debts. I have made some inquiries and found that a loan secured on only the overseas property will be close to impossible (for one thing it is being bought off the plan, with construction not yet complete) so I was advised to look into the options for Taking out a loan secured on my UK house. Could anyone advise options for this ? Thanks.

Yes, you could seek an equity release remortgage - which would mean that the debt will be secured on your own home.

As the property is unencumbered (mortgage free) you won't qualify for the fees free deals, so just be aware of this when comparing products and lenders.

The lender will obviously assess your status, and have to be happy with the basis of equity release - but from the v basic info provided re income and the v low LTV (including I assume a clean and healthy credit record), there'll be several lenders in the market for this.

You may wish to engage a whole of market broker to steamline the whole sourcing of lender and application process.

The one thing I would say is please do your homework on the oseas property, including demand/how well similar units hold the value/re-sale figs and exchange rates - as you could face a pounding on each if you're pressed to sell in the future. Engage several local agents to assist if you're still searching, and an english speaking foreign property conveyencer (we do have them here in the UK, or you could source one in the area you wish to pch), as the European property pch and conveyencing process is a little different to that in the UK so you will want to ensure that there are no lost in translation moments !

Hope this helps

Holly x

JustAnotherBayesian

Thanks Holly, my credit record has always been a mystery to me. At one point I was told my credit was poor because I had never borrowed money. Since then (last 4 years) I have had a couple of credit cards which I pay in full every month so hopefully that helps. As for taking care with the purchase, I have bought and sold several overseas properties before (that's partly how I came to be able to buy my UK house for cash) - your advice on that seems spot on, so thanks for that too.

holly_hobby

Yep, having no credit history rather than helping can actually be a hinderance, as the lender can't assess how well you manage credit commitments.

You've been savvy in obtaining credit cards, having a low balance and pay off in full each month - that will certainly help in the absence of a mortgage.

You're obviously a seasoned oseas property purchaser, so doubt there's much I can tell you that you haven't experienced or heard horror stories about before.

As I say, to cut to the quick and source the entire market for the best product and lender for you, you may want to engage a whole of market broker ... of course there's also nothing stopping you in sourcing direct if you feel confident in doing so.

Best wishes and good luck

Holly xx

Kojak12

Which country are you looking at? I would be very cautious about buying off plan. Building companies and the banks in Southern Europe are all in fairly precarious positions at the moment. If your off plan deal is brilliant warning sirens should be going off. There are loads of horror stories of sensible people who have bought off plan with bank guarantees in place (checked by local banks and solicitors) that have turned out to be worth nothing. Large deposits have been lost. Legal process vary greatly between countries and regions within countries and it can be virtually impossible to get your money back.

In most cases in an economic downturn it is better to buy a completed property that has all its utilities connected, has had a kitchen fitted, light switches, established gardens, operating golf courses… You should be able to pick up a good deal from someone struggling with a mortgage or wanting to go home. Check out local banks websites for their repossession areas. They are not well advertised by full of some very good offers.

Don't trust local agents. No matter how friendly they appear in general they will sell you anything despite knowing there are serious legal or structural issues. Use them only to find properties – do not believe anything they say about paperwork or boundaries or building work. Get a decent lawyer and make sure they are not based in or come from the town you are buying in - local connections mean that your best interests are not always top of the list if you get a local advisor.

Sorry if this negative - it is not supposed to be. I live in Spain and love it and would say, yes get a property. But After 7 years I have heard and experienced it all. Its not like the UK you have to be so careful and if anything goes wrong the government will not step in to help you recover money or deal with fraudsters.