Securing a loan to buy a property abroad

The purchase of a property abroad is now a regular thing as those living in the colder climates search out warmer and sometimes cheaper parts of the world. It is an obvious move for the couple who have spent 30 or 40 years working, raising a family and eventually taking the pension they deserve. Putting that retirement pot to good use in the form of an overseas property is one way of ensuring the family has something to inherit, and it also provides a great place to live in the senior years.

That is the ideal scenario, but there are also a good number of people who are younger and do not have that savings pot to use for a home abroad. They may be looking to make an investment and rent the property out to tourists, or they may simply not have the resources to hand when they see the ideal house overseas. In this case they may go for securing a loan on to buy property abroad.

There are different rules when buying a property abroad, especially if it is out of the European Union. Within Europe, there is fairly well a regular set of regulations on secured loans, and even some of the banks are not from the UK, but are from Spain, Germany and France. Those banks would be quite happy to provide a secured loan for a property in their respective countries. The security is probably going to be the existing house in the UK, and the chances are that this house will have been paid for and owned 100% by the new buyer. The value of that house would be matched up against the property abroad, but with property prices in the UK being quite high. The likelihood it will be worth more than the overseas property. That may not be the case for the 5 bedroom villa in Marbella, but would certainly cover the apartment on a Greek island.

So as long as there is plenty of collateral to put forward as security there would be few difficulties other than the local rules and regulations of foreign ownership. Than can come to the fore outside Europe ,and something the buyer should thoroughly research before taking out a secured loan on a home abroad. The sort of collateral need for a secured loan generally means property but there may be other items which can be used as security but a loan company will always look at all aspects of a persons finance and see if they have large loans against things such as the family car.