Need finance when buying abroad? Despite the ongoing financial crisis in the Eurozone, getting an overseas mortgage in Europe’s most popular overseas destinations is still possible – so long as you meet certain conditions.
Article written by The Overseas Guides Company
Here overseas mortgage specialist Viva Costa International gives an example of typical mortgages currently available to non-resident British buyers.
Up to 80 per cent of the purchase price (including agent fees) is available, sometimes 85 per cent. A typical term is 20 years, with an interest rate tracking the 1-month Euribor (currently 0.43 per cent) plus 2.45 per cent. Interest only mortgages are available for either 5 or 10 years, before reverting to capital and repayment
Life insurance is obligatory in France and may be arranged externally (subject to underwriters decision upon submission of application). If the cover is in a currency other than euros, the cover needs to be 120 per cent of the mortgage amount as well as the full mortgage term. The insurance company must be from the bank’s list of approved life insurance companies and the bank must be named as the beneficiary in case of death of the borrower.
Typically, up to 70 per cent of the purchase price or valuation is available, whichever is the lower, with a 25-year term and a maximum age of 70. Interest rate options include a 12-month Euribor (currently 1.49 per cent) plus two per cent. Redemption penalties include 0.5 per cent for first 5 years, then 0.25 per cent thereafter.
Some banks will not take into account declared dividends if the applicant is self-employed, however, some will, in which case the interest rate would then be around 4.5 per cent. Life insurance is obligatory with some banks and buildings insurance is obligatory with all banks.
Release of fund mortgages in Spain, whereby the client wishes to take the money out of Spain, are now almost impossible to find.
Finance deals on property offered by banks selling their own repossessed property can be as high as 100 per cent, but are not transferrable.
We have seen the interest in mortgages in Portugal reduce in the last couple of years due to the high interest rates currently being charged by the banks to non-residents. A typical mortgage will have a 75 per cent LTV with a 30-year mortgage term, interest rate of 6.95 per cent, currently assessed on individual criteria, and bank arrangement fee of 2.2 per cent.
Mortgages in Italy for non-residents are extremely difficult to obtain. Typical Italian lenders are requesting minimum loan amounts of €150,000 with a maximum LTV of 60 per cent or €250,000 with maximum LTV of 80 per cent. Please also be advised that the banks are not currently lending in Calabria.
Typically, the applicant’s contribution towards the property’s purchasing price must be 50 per cent and the interest rate for mortgages is based on the Bank’s Basic Rate in effect (now 6,25 per cent) plus the additional interest of 0.25 per cent. For all UK citizens the bank will perform credit profile searches. As in Spain, finance deals on property offered by banks selling their own repossessed property can be more favourable.
For details of property for sale in popular European destinations, visit the listings on Rightmove Overseas. One way to save money when buying abroad is to use a currency specialist when transferring your pounds into euros or other local currency to complete the purchase of your property. For more information on this, contact Smart Currency Exchange or visit the Currency Zone.
The views and comments herein are those of the author and do not necessarily reflect the views or opinions of Rightmove Overseas, Rightmove Group Ltd or Rightmove Plc