There's much to consider with property abroad

People in the UK have long aspired to purchase an overseas property in places such as Spain, France and the US, either to live there permanently or to use as a holiday home throughout the year. However, getting hold of the money to buy a dream home can be a problem for some.

So, if you are one of those people looking to purchase overseas, what options are available to you to ensure you get exactly what you are after? Perhaps the first thing you should do is examine your budget and work out precisely what you can afford.

Purchasing a property in Britain is probably one of the most complex and expensive transactions you will ever take part in, and you wouldn't sign up to purchase something without being sure it is within your financial reach. With that in mind, it makes sense to adopt exactly the same mindset if you want to snap up a home outside the UK.

However, would-be property buyers don't always have the cash available and you might therefore need to go to the bank or building society to obtain finance. Of course, the lender will have to assess the risk you may present if you are looking for a mortgage for a property in the UK and this will be no different if you are buying real estate in another country.

Despite this, there is a key difference in that you have the option to take out a mortgage either in Britain or in the country in which you want to make a purchase. A UK mortgage will depend on you using your existing property as security, as you can use it to release equity. By contrast, an overseas mortgage does not depend on your British residence, so any assets you have at home will not be affected at all.

This can be a key consideration when you are thinking of how to finance a purchase, as you don't want to put your main home in the UK at risk if there is any chance of you defaulting on your payments.

It's all about weighing up the pros and cons. British lenders might offer lower set-up fees and be willing to lend more money, while they will be fully regulated by the Financial Services Authority, so you have a means of redress if anything goes wrong. But you might be put off by the requirement of using your home as security, as well as probably having to pay higher interest rates.

If this is all a lot to take in, it might be a good idea to seek out legal advice from an expert, as they will be familiar with the costs and benefits of both options, so they can give you appropriate advice with your individual circumstances in mind.

Plus, they will be able to flag up some of the costs you might have failed to consider, which could influence any decision you take on how to obtain finance and how much buying a foreign property will cost. After all, it isn't just mortgage payments that you need to bear in mind.

You will probably have to pay solicitor's fees and insure your property, while you'll also need to think about getting the best exchange rates. It's well worth using a specialist foreign exchange service for the latter, as you're likely to save money compared with converting currency through other means.

If you’re looking for help with arranging payment for an overseas property purchase, contact Currency UK.