A Second Home Abroad

Everyone dreams of owning their own dream home in the sun - a refuge from the gloomy northern European climate. For more and more UK buyers this dream has become a reality. It can be a daunting yet very rewarding challenge.

So what’s involved?

The Property Search

This is the fun bit - everyone loves shopping. The best way to search for properties abroad is to go online. There are now hundreds of real estate agent sites and information sites displaying properties from all over the globe and offering all kinds of advice from legal and tax matters to location information. Some of the most popular sites include: findaproperty.com, Casa-Post.com, primelocation.com and casaquest.com.

Once a property has been found, it’s holiday time. Seeing the property in person is obviously essential.

Raising the finance

Unless you have access to readily available cash, you’ll have to either extend your mortgage or take out a second mortgage. Extending your current mortgage is a cheap way of raising finance. However, you might only be able to get a re-mortgage for up to 75% of the second property's price.

You can take out an overseas mortgage with various UK companies, including Halifax, Abbey, Norwich & Peterborough building society and Barclays.

The question is which currency to take the mortgage out in. If you take it out in a euros or dollars and the pound weakens against these your payments will increase. On the other hand there are various tax and legal advantages of buying in the foreign currency. Consult you solicitor and bank manager about the best options for you.

Banks offering euro mortgages include Abbey, Barclays and Natwest.

The costs

Depending on the actual property price, taxes and legal fees can make up a significant part of the overall expenditure. In Spain, you’ll typically pay around 10% of the house price, whereas in France this can be as much as 15%. The French also have a regional tax and an occupancy tax.

In Florida, USA, it costs 4% for stamp duty, legal fees, local taxes and set up costs.

Hidden extras

If you buy in an apartment complex, you’ll invariably have to pay community fees. These are general maintenance fees for the upkeep of all communal areas - swimming pool, hallways, gardens etc. Normally, they can be paid monthly or quarterly.

Water and gas bills will have to be paid. It’s better to open up a local bank account and have them paid by direct debit, if you’re not going to be in the country much.

Getting a Lawyer

Make sure you get one that speaks both English and the local language. It’s best to choose a lawyer that works solely for you, not for you and the seller. You need one that can give impartial advice. Speak to your bank or mortgage provider. They should be able to help you find one.

Quick tips

Firstly, establish a realistic budget before you start looking for a property - don’t let agents waste your time with properties you can’t afford.

Never commit to buying a place you haven’t seen - make sure you visit the area and property in person.

Rent there first - especially if you’re actually planning on actually living there.

Spend some time there out of season - make sure you still like it.

For buy to let investments thoroughly research the rental potential of the property and area - find out how much people living there are paying in rent.

Although you hear the occasional horror stories about buying abroad, it must also be remembered that every year thousands and thousands of UK buyers successfully find their dream home in the sun and simply breeze through the above process.

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