The holiday season is upon us and when we return many of us will be dreaming about creating a permanent base in the area we visited. Well, millions of Brits have already done so, and buying an overseas property couldn't be easier.
The most popular locations for a second home remain those countries close to us – France and Spain each have tens of thousands of second homes owned by Brits. But other destinations are also proving popular – from the traditional Portugal, Cyprus and the US to newer hotspots such as Bulgaria and Dubai. All of them have their own advantages and disadvantages, and all of them have ways of financing that dream home.
But it's important to do your homework. You wouldn't rush into buying a property in the UK, and you already know about this market – what sort of location you want, the type of property and the nearby amenities. So don't rush into buying a place abroad.
Legal issues
Even here, buying a home is a complicated legal process and it's no different elsewhere. Each country has its own rules and regulations and you need to tread carefully with expert advice – there have been some terrible stories about homeowners losing their property simply because they were unaware of the law, or victims of unscrupulous developers. Don't rely on the legal advice given by the seller – get your own local expert who can help you. Fortunately in almost all of the popular destinations there are English-speaking lawyers who are used to working with British buyers.
For example, in Spain you need to check whether there are any debts associated with the property. In that country – unlike the UK, where only individuals can have debts to their name – it is possible for a property to 'owe' money – if you're the owner of that property, you are responsible for the debt. Again, a good lawyer will check this out for you.
And once you've bought the property, your responsibilities don't end. You'll be responsible for the maintenance of your home, as well as the service charges associated with it – local taxes, utilities and the like. If you don't speak the language, there will be specialist managing agents who can help you.
The Mortgage
There are two options for financing your home, if you're not flush with cash. The first is to remortgage your existing UK property and use those funds to purchase your overseas property. With UK rates at an all-time low, that's not a bad option at the moment, if you have enough equity in your home. You'll have the advantage of dealing with UK based lenders and the paperwork will be easier to understand.
Or you could get a mortgage on the property you want to buy. In countries such as Spain, Portugal and France, this is dead simple. The likes of Banco Halifax, the overseas arm of the UK lender, offer great deals to British residents who want to purchase in the most popular places. You'll normally need a deposit of around 25 per cent, and your rates will be similar to what we have in the UK. You'll also get your paperwork in English and have English-speaking staff on hand if you have any queries. Remember, though, that the mortgage will be tied to the laws of the country in which you are buying – within the EU, that doesn't really make much of a difference, but in some of the more far-flung destinations, there are much stricter rules.
Investment
During the boom years that now seem so long ago, many Brits bought abroad in the expectation they would make a killing some years down the line. Popular investment hotspots included Bulgaria, Dubai and Cape Verde. While there are still opportunities out there, the market has cooled significantly around the world – and especially in Spain – so while you may be able to pick up a bargain you will have to market the property very well indeed if you are to make a living from lettings. And future growth is no longer the seeming guarantee it once was.
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