question about remortgaging for overseas property purchase

dk67

Hello all and Merry Christmas!

I would be grateful for any thought on the following:

I have paid a deposit ona property overseas and have a further £60k to find to complete the purchase.
Obtaining an overseas mortgage has been more complicated than i expected.
I have now started to wonder about 'adding' onto my existing UK mortgage (remortgaging I guess).
My property here is worth £195K with outstanding mortgage of £48K. I only moved to my new mortgage provider this summer on a Base Rate Tracker deal.
Any thoughts on applying to remortgage with the same building Society for an extra £60K would be much appreciated.

Also how long does this usually take to arrange?

Thanks all

horace_2

QUOTE]Obtaining an overseas mortgage has been more complicated than i expected.[/QUOTE]

Doing one`s homework after giving a deposit and, presumably entering into a binding contract, is to say the least rather foolish.

I hope you can salvage something from your odd decision.

h

MortgageMamma

Its not all doom and gloom

Very much what is best to do depends on your current mortgage and when you paid the deposit for the foreign property. if its in a country governed by English law there may be a cooling off period so you may forfeit your deposit but be able to back out of the purchase.

BUT

If its really what you want it should be possible to raise the finance you need. I note you have remortgaged onto a tracker deal quite recently, are you tied into this? are there any early repayment charges? if not then a straightforward remortgage could be the answer. If you are tied in you could approach your existing lender for a further advance and if this is not possible revert to a secured loan from a reputable company.

Its impossible for me to say which is best without further information from you, including your incomes, current credit commitments and credit status.

Hope that helps a little, and if you do go for it with the foreign property I wish you a happy warm summer! (she says with a broken central heating!)

dwsjarcmcd

One another point in addition to what MM says is regarding the country you are buying in and their laws. I recently bought a flat in the South of France and it was my original intension to raise the funds against our property here, however, there are good reasons not to (and one why you should consider raising the finance here)
For - Euro mortgage rates are lower than the UK rates
If you plan to rent it out, you can offset the interest charges against the rental income you receive, therefore reducing your tax

Against - Currency movements. These can go for or against you, however, you can structure your finances so you do know what you will be paying each month, for the next year.

I didn't find arranging a mortgage a particular hassle, though I would agree it's not as straightforward as a re-mortgage or further advance

David

dk67

Hi, thanks all

Mortgage Mamma: the property is in my home town in Morocco. Joint income between us of £39k. We paid the deposit (with clause in contract in case we could not arrange a mortgage) - as we had managed to negotiate a 20% drop in the property price.I am interested in your point of remortgaging again. No we are not tied in to the current deal.

Horace: as above, we ensured the notaire put the clause in the contract and I know we can get a mortgage there, but there is so muc red tape in M and we would be forever flying out for the smallest of things. I would much prefer to finish this with cash now.


dwsjarcmcd: I agree with your points and the currency situation has been a concern too. Good luck with your new flat!

Now about to call mortgage provider and ask about remortgage/further advance.
Thanks all

MarkyMarkD

dwsjarcmcd wrote: »

If you plan to rent it out, you can offset the interest charges against the rental income you receive, therefore reducing your tax

That applies whether you borrow against your UK property or your foreign property. The security isn't the issue, it's what the money is borrowed for that matters.

Rick62

DK, you have lots of equity in your UK property and your earnings confortably support a further advance, so I agree that taking a further advance from your UK lender is going to be much easier and quicker and in all probability, cheaper.

dwsjarcmcd

MarkyMarkD wrote: »

That applies whether you borrow against your UK property or your foreign property. The security isn't the issue, it's what the money is borrowed for that matters.

MarkyMarD - I don't claim to be an expert on this subject but the following is an extract from a specialist French Mortgage Broker's site (French Mortgage Connections), who would disagree with you.

'You should also bear in mind that, as well any potential upside or downside currency risk, there are also other financial factors to consider.
One good example is if you intend to derive an income from the letting of your French property (or you decided to do so in future, even if was not the initial intention). In such cases you would be able to offset the interest on a French mortgage against the French rental income for tax purposes, whilst the property was let out - a real and potentially very useful advantage for high tax payers - especially to the Higher Rate taxpayer in the UK and to US clients. This offsetting of interest being paid would not be possible with the interest due on any domestic remortgage, further advance or any other domestic loan taken out outside of France itself - even if it was wholly used to fund the entire purchase of the French property. The loan interest on such domestic borrowing could not be offset against the French income received from the property at all.'