Expatriate home buying can be an exciting and enjoyable process once one understands a few basic principles of purchasing overseas property and overseas mortgages.
Contracts should never be signed if they are not fully understood, especially if you have not translated it into your native language. Advice from specialists is a must have. Seek out independent architects, surveyors and solicitors that are proficient in the property's country laws. You will want an expert in the process of that country and the specifics of property purchase and title transfer.
Occasionally you may find a developer has borrowed funds and part of this amount as been assigned to each plot as additional security to the developer's bank. You may find yourself inheriting a debt on your property before you even purchase. An experienced solicitor will be able to check this out for you.
Check for “opt-out” clauses when looking for mortgage financing so that if the loan fails the approval process you can receive your deposit back. Overseas mortgages usually require substantial deposits and it is wise to assume you will need to pay for most of your property in cash.
Before signing an agreement to purchase the property, arrange your mortgage “in principle” and unless you plan on using the property as rental income, you should arrange your financing in the currency you earn your income in. Some lenders require them to be the same but will make exceptions for rental property purchases.
Another consideration is the cost imposed by the legal and governmental authorities for purchasing property in that country. Your estate agent or mortgage originator can verify this for you. Also keep in mind that expenses do not end once you agree on a purchase price. There are legal fees, taxes and insurances that must be met in your host country and they can often be more expensive than what you may be accustomed to with American real estate transactions.
It is recommended that you open a bank account in a local country, acquire a Certificate of Importation for funds you bring in and then schedule standing orders with that bank to pay bills and taxes in a timely fashion. In some countries, such as France, Portugal and Spain, failure to pay on time could result in immediate court action and or seizure of your property.
Another option to consider is pooling funds with family or friends. This will open up your options regarding size and style of property as well as add to your negotiable funds for securing a better loan. Many overseas loans restrict loan values to 50-70% of the purchase price or valuation (whichever is lower). Loans are also often restricted to 20 or 25 year loans, or up to age 70, whichever comes first. Some countries may offer exceptions to the age rule if you can prove retirement income.
As with any large purchase, plan to give yourself a break, a “cool off”, before jumping into a purchase. Foreign property ownership is exciting but is filled with new laws, customs, cultures, requirements and technicalities you may not be familiar with in the United States.
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