Buying a home abroad

Caroline Cassidy

Buying property abroad is more and more popular and now millions of Britons dream of owning a home overseas. If you're planning such a move here is some advice on how to invest wisely.

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As far as finance is concerned having sufficient cash to buy outright is a real advantage as you won't be adding to your mortgage debt. If not then you should consider increasing your existing mortgage or try for a second. Speak to your bank or building society. Most UK banks will have an overseas property service. A mortgage extension can be an inexpensive way of raising funds but remember you put both properties at risk if you fail to meet repayments. If you are considering a mortgage in the local currency then you should bear in mind that should sterling fluctuate you repayments will change too.

Buying isn't the only expense to consider. Do your research and find out what local taxes you might have to pay. It will help if you open a local bank account as you will probably need to pay utility bills via direct debit and may be charged for currency exchanges.

There is a good chance you will be renting your property out and if you are then you need to speak to the taxman. This applies to the country you are buying in. There may be taxes to pay on any proceeds earned. There will usually be an agreement in place between the UK and the country you have your home in that means you don't end up paying twice. Another financial issue to consider is inheritance tax. You will be well served by making a will to avoid problems with local tax laws.

Legal fees can quite high when buying abroad. The UK is relatively cheap in comparison with other countries. France has fees that can be as high as 15 per cent of the house price. Spain will be more like 10 per cent as will Italy. Make sure you do your research before finalising your choice.

There will also be insurance costs. Try getting some quotes from insurance companies who have expertise in this area.

Remember that you may have seen your dream property while on holiday in the warmth of the summer sun. It's a good idea to revisit out of season as it won't be just the sun that's missing. Many holiday communities close down in the winter so you could struggle with amenities.

If you are looking to buy cheap and renovate try getting advice first. Dealing with building contractors and suppliers can be tricky when you are not familiar with local customs and timescales. It will also require a real commitment to run the project, especially if you have to commute backwards and forwards to the UK.

There are estate agents that offer an overseas service and this is a good place to start when doing your research. Get yourself a lawyer who speaks English as well as the local language.