Buying a property abroad with mortgage: how to do it

by André Piti On 02/04/2022

The research institute MSCI reports a global capitalization of 10.5 trillion$ for the real estate market in 2020, with an unexpected, consistent growth.

In fact, despite the Covid-19 events, this is still considered one of the most stable market out there so, if you’re ready for an investment, buying a property can be your safe anchor.

Specifically, purchasing a real estate in a foreign Country can be a great move because it:

diversifies your portfolio
allows you to have inheritance tax benefits
allows you to ask for high rents if you rent it out for vacations

Buying a property abroad with a mortgage from your local bank

Generally, local banks in US and UK will not allow you to access mortgages to buy properties abroad. Nonetheless, there are banks that offer international services, allowing you to:

Save money
Reduce the chance of being scammed
Accelerate the process

Yet, such services are not easy to find. One of the best way to sneak around the problem is to find an international bank with branches in more than one Country (at least yours and your destination one).

Alternatives to using a local mortgage:

If finding a local lender gives you struggles, you can consider applying for a mortgage from an overseas lender.

Here are some Pros:

A local lender will have greater knowledge of the local laws and mortgage market
It will also provide you with better access to more mortgage deals

And Cons:

The interest rates could be much higher than if you were a local
Frauds, overpricing and hidden clauses are more likely to happen

This is why it’s always better to use your own lawyer and translator to protect you from possible frauds.

Also, we recommend you do your research on the lender’s authority.

As a brief piece of information, lenders usually require a deposit (down payment) of at least 20%.

But some countries may ask you for higher deposits to start an overseas mortgage.

We talk more in depth about alternatives and hints to buy a property abroad without a mortgage here.

In conclusion, both local and foreign mortgages have pros and cons, they can offer fixed, variable or mixed rates, but the rules will always be dictated by the specific foreign laws.

You can make yourself an idea of the pricing for properties in specific countries visiting our listing.