Holiday Home Mortgage Overseas
Introduction – Providing finance for your overseas holiday home is as important as obtaining the correct holiday home insurance. Of course you may be lucky enough to be able to finance the purchase of your holiday home without a mortgage but many people consider that it is best to hold on to your money for investment purposes, perhaps in equities and borrow money as interest rates are still relatively low. The principle of leverage is often a consideration in the purchase of a holiday home, providing of course that the property grows in value more than the interest rate that you are paying, then your investment will grow even quicker. Yields on holiday home rental property can further be enhanced by taking interest only mortgage loans and many of these are now available. Fixed rate loans for the purchase of a holiday home are quite popular; it enables you to accurately budget for a number of years ahead. There is also a trend to take a mortgage on this type of investment as the loan can be used to offset the net value of the overseas property and so in most cases, this helps to reduce the inheritance tax in the country where the property is located. On all matters pertaining to taxation, you should seek professional advice. The next step is to consider the type of mortgage you require, many are available either from the United Kingdom market or in countries such as Spain & France, locally. Of course there are advantages and disadvantages of both.
Holiday Home Mortgage UK
- You will probably already have a mortgage for your home, therefore their will be no legal or land registry fees if you take out a further advance. There may be an arrangement fee but often if you are a valued borrower, you can negotiate this with the lender.
- If you borrow more money, you may have the opportunity to re mortgage and obtain a lower overall rate of interest.
- UK interest rates apply, at the present moment though, these are higher than those available in Spain for example.
Home Mortgage Overseas
The set up costs of an home mortgage overseas are typically higher, 4% of the amount borrowed would not be unusual. Interest rates will be calculated locally, in Spain form example, at the present moment, these are lower. You UK assets will not be tied up. There will be a good balance between your assets (in this case the house) and your debts. If you have bought your overseas holiday home for rental purposes, then you may have the added advantage of being able to offset the cost of the mortgage against the income receive, thus reducing your overseas tax. The mortgage on the property will reduce it’s net value. This will help to reduce the overseas inheritance tax payable when you die. This is particularity important if the inheritance tax rate is higher overseas than it is in the United Kingdom. Obtaining and sourcing your overseas holiday home mortgage should be your first priority, even before you look at viewing property. You will need good legal advice from a professional that can advise you against all the tax advantages & disadvantages that are applicable to your own personal situation. Only buy finding out your exact circumstances can advise be given and you can then decide on which mortgage is bet for you. When you have eventually found your property, contact Assetsure as soon as possible, we will then be able to offer you advice on the correct form of insurance needed to protect your investment. We are able to provide insurance for property that is either used solely as your own personal holiday home or is rented out to family, friends or tenants.
