International Mortgages


International Mortgages

In an ideal world everybody would have property in their portfolio, because we all want a roof over our heads, whatever stage of life we are at.

However, whilst a property is an important asset to have in your portfolio, it is not always the best investment strategy and should be considered carefully.

As one of the most expensive purchases most people ever make, a home's investment potential should be an important consideration for prospective investors. You should think about a home's investment potential as a long-term investment, similar to a savings account. With a typical home, you can expect average annual appreciation of 3%-5%.

The Benefits

  • Property can be less volatile that shares
  • You can earn rental income and benefit from capital growth if your property value increases over time
  • You are investing in something that you can see and touch

The Pitfalls

  • Rental income does not usually cover your mortgage payments or other expenses so you may have to use your own money to cover these costs.
  • A jump in interest rates will affect your returns and decrease your disposable income.
  • There may be periods of time where you don’t have a tenant and will have to cover all of the costs yourself.
  • You can’t sell a room off if you need access to some cash in a hurry.
  • If the property market dips, so does your whole investment. There are many instances where people have ended up owing more than their investment was worth, this is known as negative equity.
  • There are very high entry and exit costs.
  • If you property investment is your only major investment then you may have little or no diversification. You will have a lot of money riding on one small market.
It is also important to consider any taxation obligations that might arise as a result of selling your home. For example, expats that sell property in the UK may now be subject to Capital Gains Tax if you were then to sell the property and that could amount to 28% of any profits.

When considering the purchase of a property overseas, preparation is the key. The first thing that should be established is the budget available. Deposits required, current and future exchange rates, total cost of finance, legal fees and tax obligations, should all be calculated before viewing any potential properties.

We strongly suggest that you take the time to consult with a professional financial adviser if you require advice on a specific product. Take some time to browse our directory, for an adviser with experience in the field you require.

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