Foreign property

Posted on 27 May 2011 by Glyn Topham


Looking to purchase a foreign property .circa 45k (inc expenses}.  Currently have English Semi value £160k with no mortgage, an English apartment value £130k (£33k buy to let mort ) + Spanish House value 50k no mort.

Could finance above , but it would wipe us out.  Looking for say £20/25k . Dont fancy equity release on semi as we may want to rent out some day!

Best Options ???

Glyn

Depending on where the foreign property is, I think you will have trouble using it as security for a mortgage.  The amount that you wish to borrow is simply to small.

This leaves you with how to raise the money in the UK and whether or not to use one of your existing properties.  Without knowing the amount of rent you receive each month I can not be precise, but it would seem to me that you should be able to raise the money you need on your apartment.  There are advantages and disadvantages to this.  The additional interest you will have to pay may qualify special tax treatment, you would have to take specialist tax advice on this, but the mortgage would be in a different currency to the property and you could find yourself in negative equity due to currency fluctuations.

If you really do not want to capital raise on an existing property then you may need to consider a personal loan.  As well as the currency differential you would be paying a higher rate of interest than on a mortgage, although you can elect to repay it over a shorter which may make it cheaper in the long run.

Peter

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