How to buy and finance a house abroad (UK guide)

Dreaming of buying a holiday home abroad? You’re not alone, as around 1.5 million Brits are estimated to own a property overseas.¹

Whether you’re planning to move to the US, buy an investment property in Europe or spend your winters in the Caribbean, you’ll need to know how to buy property abroad.

We’re here to help, with a complete guide to buying a house abroad for UK nationals. This includes info on arranging finance for overseas property purchases.

We’ll look at the necessity to get a mortgage in the country you’re buying in, as it isn’t possible to use UK mortgage products for overseas purchases.

Plus, we’ll cover deposits, purchase fees, taxes, planning permission and other useful info, along with some tips on finding your dream property.

Just as importantly, we’ll show you how to avoid losing out to currency conversion by using the Wise account to send money overseas.

So, let’s dive right in.

Buying property abroad as a Brit

The process of buying property in a foreign country may not be the same as you’re used to in the UK.

It’s important to do as much research as possible before you get started, including checking whether you’re eligible to buy property as a non-national of the country.

Which countries are easiest for Brits to buy property in?

Despite Brexit, it’s still relatively straightforward for Brits to buy property in many European countries. Popular examples include holiday hotspots like:

• Spain
• Portugal
• France
• Italy.

In many cases though, there may be residency requirements - or you’ll need to get a local tax number.

If you’re looking to buy a property as a holiday home or investment, without having to live there, it could be worth looking at destinations like Dubai. There, foreigners are permitted to buy property in certain designated zones without having to live there.

As well as looking at where it’s easiest to buy property as a Brit, you might also want to check out where buying property abroad is cheapest.

What is an overseas mortgage and how do they work?

An overseas mortgage is any property loan taken out on a property outside your country of residence (i.e. the UK).

It works pretty much the same as a mortgage on a UK property. But you’ll either apply for a specialist product such as an ‘overseas mortgage’ from a UK provider, or you’ll apply from a foreign bank or lender in the country you’re buying property in.

Either way, the process of applying should be pretty similar to getting a mortgage for UK property. You’ll usually need to meet eligibility/income requirements and provide supporting documents. But there may be additional steps involved, depending which country you’re buying in.

4 ways to finance buying a house abroad

You have a few options when it comes to financing your overseas property purchase. Let’s take a look:

1. Borrowing from a UK bank to buy overseas property

Some UK banks offer international banking services, which can include overseas mortgages. Sometimes known as ‘expat mortgages’, these can be used to buy property abroad.

Here are a couple of the UK banks which offer expat mortgages:

Bank	Overseas mortgage coverage
HSBC	International mortgages available anywhere HSBC provides personal banking services. Expat Bank Account required.
Santander	Jersey and the Isle of Man only.

There are a few benefits to going down this path. For starters, you’ll be able to arrange a mortgage in your own language, with application and other processes that you’re used to. If you’re already a customer with the bank, you might even benefit from preferential rates.

To get started, you’ll need to contact the international banking arm of your chosen bank and find out about their application process.

2. Borrowing from a foreign bank to buy overseas property

With overseas mortgages from UK banks a little limited, it could make sense to approach a lender in the country you’re buying property in.

Residency and other eligibility requirements may apply, and you may be offered different terms/rates compared to local applicants.

For example, when applying for a mortgage in France, you may only be able to borrow around 50% of the purchase price as a non-EU national.²

3. Remortgaging your UK home to buy an overseas property

One way to finance overseas property is to remortgage your UK home. The purpose is to borrow more against your current property, then you can use the money to fund your overseas property purchase.

It’s important to do your sums carefully though, and make sure you can afford the repayments. You don’t want to overstretch yourself either, so leave enough money in the bank to cover bills and save for a rainy day.

You could also look into equity release as a potential option for financing a house abroad.

📚 Read: What is equity release?

4. Use your existing savings to buy a property overseas

Got plenty of savings? You can use this money to buy your holiday home overseas. What’s more, you might be more attractive to sellers as a cash buyer.

If you’re still saving, check out Wise Interest - it lets you earn returns in GBP, USD and EUR by investing in a fund that holds government-guaranteed assets - and all while retaining easy access to your money. Capital at risk.

Open your Wise account

You can also use Wise Jars to ring fence funds for particular purposes, such as your upcoming property purchase.

How to arrange an overseas mortgage abroad

The process of applying for a mortgage from a foreign bank or lender can vary. But to give you an idea, here’s what’s usually involved in getting a mortgage in Spain:

1. Apply for your Número de Identificación de Extranjeros (NIE). This is your financial number, essential for getting a mortgage or buying property in Spain.
2. Contact your chosen bank or lender to see what documents you’ll need. In some cases, it could be worth making an appointment.
3. Apply directly to the lender, or use a mortgage broker or other expert (this method could be best for expats, especially non-Spanish speakers)
4. Complete the application process, providing the following supporting documents:³

• NIE number
• Proof of employment or income
• A pre-agreement with the seller
• Proof that the property tax is paid to date
• Details of your current debts and mortgages
• Copies of all your existing property deeds (in Spain and elsewhere)
• Records of your current assets.

Deposits on overseas property

Along with arranging finance for your overseas property purchase, you’ll also need to make sure you can afford the deposit.

Here are the average deposits in some of the most popular countries for Brits to buy property in:

Country	Average mortgage deposit
Spain	20% to 40% (depending whether you’re resident/non-resident)4
Italy	20% to 40% (depending whether you’re resident/non-resident)5
Portugal	10% to 30% (depending whether you’re resident/non-resident)6
France	Around 50% for non-EU nationals2
UAE	25% to 35%7
USA	Around 25%7
Australia	At least 20%8

Buying a house abroad: fees and legal considerations

Now it’s time to take a look at the fees involved in buying property abroad, along with tax and legal considerations.

What are the fees for an overseas mortgage?

The following fees may apply when getting an overseas mortgage:

• Broker fees
• Arrangement/application fees - sometimes known as product fees
• Valuation fees
• Early repayment/cancellation fees.

The exact fees will vary by lender, and depending where in the world you apply for your mortgage.

Do you pay stamp duty buying a house abroad?

Stamp duty is common when buying property overseas, just like in the UK.

Not all countries have it, although some charge a similar property transfer tax.

For example, you can buy property in the UAE without paying it, but other taxes and fees will apply.

Stamp duty rates vary by country. Property tax rates in Italy are between 2% and 9% of the property’s value⁹, whereas stamp duty in Portugal is much lower at 0.4% to 0.8%¹⁰.

Tax on overseas property

You may have other taxes to pay when buying property overseas. For example, the country may have annual taxes on property ownership, or you’ll need to pay tax in the UK on rental income earned on your overseas property.

Tax can be complex, especially when you have obligations in more than one country. It’s recommended to consult a specialist tax advisor to help you understand your liabilities and help you organise your finances.

📚 Read: Overseas property and tax

Exchange rates for buying property abroad

Another thing that can trip you up when arranging the financing for property abroad is currency conversion.

When you send or receive money between countries, the exchange rate really matters - especially for large sums. To avoid mark-ups on the rate along with expensive fees, it could be worth investigation solutions such as Wise.

With Wise, you can securely send money worldwide for mid-market exchange rates and low, transparent fees*.

You can use our handy converter tool below for live rates:

There’s even a dedicated solution for sending large amounts between countries.

Other things to know about buying property abroad

You might come across other quirks, rules and requirements when buying property in a foreign country. Here are just a handful of examples:

Buying a house in Portugal and Spain - ‘property-based citizenship’

Foreign investors buying a home in either Portugal or Spain may be granted ‘property-based citizenship’ if they live there for at least 5 years. This is worth bearing in mind if you have a plan to move abroad permanently, as property can pave the way to citizenship and the rights that come with it.

Buying a property in Poland - getting a permit

Since Brexit, non EU/EEA citizens may need to apply for a permit from the Polish government’s Ministry of Interior granting permission to buy property.

Buying a property in Australia - getting permission to buy property

Similarly, foreign investors (non-resident) or temporary residents may need to apply for permission to buy property from the Foreign Investment Review Board (FIRB).

Finding a property abroad

Now, let’s help you find your dream overseas property.

Using UK property estate agents

Many UK estate agents and property websites have dedicated services available for UK buyers searching for properties overseas.

Here are some options to try:

• Zoopla
• Rightmove
• OnTheMarket
• A Place in the Sun.

Luxury estate agents

Looking for something a bit special, and have the budget to match? Here are a handful of the high-end estate agents that sell property abroad:

• Savills
• Knight Frank
• Hamptons International.

Using an estate agent overseas

If you’re already living in the country you’re looking to buy property in, or you spend a lot of time there, it could make sense to use a local estate agent.

The major benefit of this is that a local agent will have detailed knowledge of the property market in the area, and may be able to advise on how the process of buying property works.

However, you might need to factor in the language barrier. If you’re not fluent (or the agent doesn’t speak much English), you may be better with a UK agent’s international arm.

To find a reputable agent, start with the official trade body for estate agents in the country (if one exists). Or you can try the Association of International Property Professionals (AIPP).

Property shows and exhibitions

Need inspiration? A property show or exhibit could be worth a visit, where properties for sale are showcased - along with helpful info and services for international buyers. There may even be properties not for sale elsewhere.

Here are a few to check out:

• A Place in the Sun Live (UK)
• International Real Estate Expo (international locations)
• Property Investor Show (UK)

Cheap property renovation incentives

In some countries, incentives are offered to foreigners looking to build or renovate overseas property.

This includes the 1 Euro Houses or €1 Houses scheme in Italy. This is where some of the country’s most dilapidated houses or properties not previously used as residences (such as lighthouses for example) are available for the symbolic price of €1 provided the buyer can provide a clear plan and financing for renovation.

There’s also the ‘Akiya’ houses of Japan, which are abandoned or otherwise vacant houses in rural parts of the country. The government or municipal departments make these houses available for purchase at very cheap prices, provided the new owner brings them up to standard.

Pros and cons of an overseas mortgage

Not sure if an overseas mortgage is right for you? Here are some pros and cons to bear in mind as you make your decision:

Pros ✅	Cons ⛔
There are far more options for local mortgages, compared to UK lenders willing to fund overseas property purchases.	The minimum deposit can be higher for foreigners and non-residents.
Having a local mortgage can make the process of purchasing property a little easier.	Mortgage services may not be provided in your language.
With an overseas mortgage secured, you don’t need to remortgage or amass large savings in the UK.	Overseas brokers and mortgages aren’t covered by the UK’s Financial Conduct Authority (FCA).

Avoid currency exchange fee markups with Wise

Buying a property overseas is likely to require a number of payments and transfers. For example, you might need to pay broker or real estate fees, or pay a deposit to your seller or mortgage provider.

When making these transfers, you need to watch out for the extra costs involved in currency conversion.

Avoid unnecessary exchange rate mark-ups and high fees by opening a Wise account. Hold your money in 40+ currencies at once, and securely send transfers all over the world at mid-market exchange rates for low, upfront fees*.

There’s even dedicated support for large amount transfers, to make extra sure your money arrives safely.

Open your Wise account

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Sources used:

1. Charles Stanley - case study: buying a property abroad
2. Expatica - French mortgages
3. Expatica - mortgages in Spain
4. Caser Expat Insurance - Spain mortgage deposits
5. Expatica - Italy mortgage deposits
6. Expatica - Portugal mortgage deposits
7. Manchester Evening News - mortgage deposits in different countries
8. Westpac - Australia mortgage deposits
9. Accounting Bolla - stamp duty rates in Italy
10. Get Golden Visa - stamp duty rates in Portugal

Sources last checked on date: 15-Aug-2024