Buying property overseas is usually more complicated than buying locally. You’ll need to consider a number of risks and might need to work out how to get a mortgage for a property abroad. This guide explores the difficulties you might face as well where you can go for advice.
- Know the risks when buying property abroad
- Getting a mortgage for a property abroad
- Get independent legal and financial advice
- If things go wrong when buying abroad
- Next steps
Know the risks when buying property abroad
- Tax – make sure you account for all the tax you’ll be liable to pay, both in the UK and in the country where you have the property.
- Check the paperwork – make sure that you have all the necessary permissions, licences and planning consents before you sign any form of contract or agreement.
- Exchange rate changes – even a small change to the exchange rate could drastically affect the value of your purchase. This could make a property – or your mortgage repayments, unaffordable overnight.
- Beware developers and the hard sell – don’t succumb to heavy pressure to sign up with a deposit before you’ve had a chance to think carefully and get independent advice.
Getting a mortgage for a property abroad
If you have a mortgage where you’re making repayments in a foreign currency, the lender must tell you if the exchange rate fluctuates by more than 20%.
These rate fluctuations could affect your ability to meet your future mortgage commitments.
To protect borrowers, lenders must offer you the option to repay the mortgage in another currency.
Get independent legal and financial advice
Get independent advice
“We strongly recommend that prospective purchasers of overseas property seek independent legal and financial advice at all stages of their purchase.”
Source: The Foreign and Commonwealth Office
Always seek legal advice from a lawyer who is independent of everyone else involved in the deal including:
- The seller
- Developer, and
- The estate agent
Ensure your lawyer is fluent in both English and the local language, and that they understand property law in the country where you’re buying plus how it relates to non-residents.
If you’re appointing a UK legal firm, check that they’re registered with the Law Society in the UK and specialise in international transactions and property conveyancing.
- Find a legal adviser on the Law Society of England and Wales website
- Find a legal adviser on the Law Society of Scotland website
- Find a legal adviser on the Law Society of Northern Ireland website
If you’re appointing an adviser in the country where you’re buying the property, you should be able to find lists of English-speaking professionals on the website of your local British Embassy.
Financial advice
You can find an independent financial adviser via the links below.
All of the following websites let you search by postcode and some let you search for specialist advisers only:
If you’re not sure how to go about choosing the right financial adviser, see our guide Choosing a financial adviser.
If things go wrong when buying abroad
An overseas property purchase is not regulated by the Financial Conduct Authority (FCA) so you’ll not be protected by the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.
Even if you use as FCA-registered financial adviser or mortgage broker in the UK to make the deal on your behalf.
Next steps
- Find out more about buying property abroad on the Which? website
- Read advice from the Foreign and Commonwealth Office on buying property abroad
This article is provided by the Money Advice Service.
