The over 50s guide to buying a property overseas
Whether you are looking for an easy-care apartment on a managed resort or a rustic farmhouse surrounded by vines, you need to make a checklist before committing to buying a holiday outside the UK. Here are things to consider if you’ve always wanted a home abroad.
If you are looking to find a home in the sun, France, Spain and Portugal remain firm favourites, although some will, of course, set their sights much further afield. Crucially, if you are tempted to dip a toe into the foreign property market in the hope of bagging yourself a bargain, you need to be aware that the process is complex. When buying overseas, there are a host of legal, financial, tax, cultural and also linguistic issues to consider. For this reason, it is essential to plan very carefully.
1. Choose your location
At the outset you need to decide on a country and a particular location within that country. To do this, you may need to carry out lots of holidays or short visits until you get to really know an area and decide that it’s right for you. Having decided where you want to live, you then need to decide what kind of property you want. That might, for example, be an apartment in a block with access to a beach and a pool, or a remote cottage in the middle of the countryside.
2. Work out what you can afford
You still need to sit down and work out carefully exactly what you can afford to buy in your chosen location, as you don’t want to end up over-stretching yourself. You also need to be sure you can actually afford the property after you’ve bought it. There might, for example, be extra fees to cover the upkeep of communal areas, such as a shared pool or gardens.
3. Do your research
Don’t forget to spend time checking out local facilities, such as the shops, restaurants and potentially the coast. Also ensure there are good transport links to the main cities and airports.
4. Get your finances in order
When spending hefty sums on an overseas property, it’s vital to get the finance right. The simplest option may be to fund the purchase by raising funds based on equity you have in your UK property or other assets. Alternatively, you may need to take out a mortgage.
5. Get your finances in order
In more tried-and-tested markets, such as France, Spain and Portugal, you may be able to take out a mortgage in the local currency. In newer markets you will probably be limited to raising finance on other assets in the UK. Crucially, you should look to have an “agreement in principle” before you start property hunting. This will tell you how much you can borrow, and also demonstrates to estate agents and property developers that you are a serious buyer. To sort your finance, consider approaching a mortgage broker which specialises in purchasing property abroad.
6. Appoint a solicitor
When buying a place overseas, you should take proper legal advice from a reputable local specialist and someone who speaks good English. You should also ensure they are up-to-speed on the laws and rules of the country in which you are buying. In addition, it is essential that you choose someone who will protect your interests and not someone recommended by the estate agent. Personal recommendations from friends, family and colleague can be a helpful starting point.
7. Check all the paperwork
Never sign a contract that you don’t understand or which is in a foreign language, and never make a payment without checking with your legal adviser. Also take the time to check the tax rules on property purchases, as buying abroad can come with a host of tax challenges, such as potentially exposing yourself to inheritance tax in your chosen country.
8. Factor in all the costs
As well as the mortgage, make sure you allow for transaction costs, including stamp duty, legal fees, taxes and insurance. In Spain, for example, the transfer tax, notary fees and other costs can potentially add another 10% to the purchase price.
9. Take care when transferring money
When purchasing abroad, you need to be aware of the fact you will be exposed to exchange rate movements. With this in mind, it is worth using the services of a foreign exchange company, such as HiFX, Caxton FX or Moneycorp. These firms will offer “forward contracts” enabling you to lock into the exchange rate for up to 12 months in advance. This means you can protect yourself from currency fluctuations. At the same time, the rates on offer from currency specialists are also likely to be a lot more competitive than those offered by the high-street banks.
10. Understand the responsibility
Before signing on the dotted line, make sure you are ready for the commitment of owning a property in a foreign country. Make sure you do all the preparation you can. Talk to agents, locals and holidaymakers in your chosen area so you fully understand the market, and spend as much time as possible getting to know the language and the culture.
For more information on buying abroad, useful sites include;
www.aplaceinthesun.com
www.overseasguidescompany.com
www.mortgagesoverseas.com
(Article source: Various)
