If you are planning to buy a house from another country then it is possible to get a mortgage to finance that house. However, some factors determine the possibility of getting a mortgage from another country. One key condition is, that the financial institute or the lender must have an overseas presence to help you get the international mortgage and finance your house.
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- 1 What is an Overseas Mortgage?
- 2 How to Get a Mortgage from another Country
- 3 How Much Down Payment do you Need for a Foreign Property?
What is an Overseas Mortgage?
An overseas mortgage is quite similar to a normal mortgage but the difference is, that an overseas mortgage will help you buy a house in a foreign nation. You can apply for an overseas mortgage at any local bank or from an overseas lender in the country where you want to buy a house. Whether you can qualify for an overseas mortgage depends on your personal finance and what lender you have chosen. You have to pick a lender that will be able to provide support for your chosen country or territory.
How to Get a Mortgage from another Country
Buying a house in another country is also very exciting but it is also a very daunting task. One major problem people face while buying a house in another country is financing their house. There are quite a few ways available that you can use to finance your overseas property. They are –
- Apply for Overseas Mortgage from a Local Bank
- Apply for a Mortgage from an Overseas Lender
- Release Equity from your Own Home
- Use your Savings to Finance Overseas Property
1. Apply for an Overseas Mortgage from a Local Bank
There are many banks available in the USA that offer international banking services as well as overseas mortgages. So, you have to contact financial institutes that offer international services to see whether they can support your chosen country or territory. Choosing a lender from your home country has some advantages like –
- You can get a mortgage in your own language
- You won’t face any translation problems
- You will be able to save money on translation service fees
- The mortgage process will be much quicker and you will be able to save some precious time
- Having a higher credit score will increase the chance of getting an overseas mortgage
While buying a house in another country with an overseas mortgage, you should keep in mind that you won’t get the same legal protection, depending on the location. Moreover, you also have to consider the foreign ownership laws; tax rules; planning permission; etc. Therefore, should choose a local lender that has an idea about that particular country’s local laws to avoid any consequences.
2. Apply for a Mortgage from an Overseas Lender
This is another excellent way you can finance your overseas house. You can get a mortgage from an overseas lender through a foreign bank or a specialist broker. Some advantages of an overseas lender are –
- They have complete knowledge of the local laws and mortgage market
- You will get access to various special mortgage deals and lower interest rates
But you should keep in mind that, getting approval for an overseas mortgage is very difficult. Moreover, you have to pay a higher interest rate compared to a local. If you get approval for an overseas mortgage, you have to make the mortgage payments in a foreign currency. Your cost might increases if your home currency is weak compared to the local currency overseas. Furthermore, if you decide to pick a foreign lender then make sure you use your own, independent lawyer to protect yourself from fraud.
3. Release Equity from your Own Home
This is another great way you can finance your overseas property. But, to do so, your local property should have enough equity in it. So, you can use your local house to refinance it and then use the money to pay for overseas property. Equity is the value of how much your property currently is. It indicates how much you will get if you sell your house or the property.
You can easily increase your property’s equity by overpaying your mortgage payments. Moreover, if you overpay your mortgage payments then it will help you pay off your mortgage earlier and save money on interest charges. In many countries, you can use your local property as a security for your overseas mortgage. But, countries like Australia and Canada don’t accept the foreign property as security for a home loan.
4. Use your Savings to Finance Overseas Property
If you have large savings then you can use your savings to finance the overseas property. If you can use your cash to buy a house in another country then you will be able to overcome the challenges of getting approval for an overseas mortgage. If you can afford a foreign house with cash then you will be able to save money on –
- International bank transfer fees
- Tax and legal fees
- Translator fees
- Furniture, shipping, and insurance costs
- Costs of maintaining the property
Moreover, when you buy a house with cash, you don’t have to worry about paying monthly fees and you will be able to save a handsome amount of money on the interest rate. So, if you are planning to buy a house in another country with cash then you should also open a bank account in that particular country. Having two bank accounts will help you save lots of money on transfer fees.
How Much Down Payment do you Need for a Foreign Property?
When you want to buy a property in a foreign country with an overseas mortgage, the lender will ask you to make a deposit or down payment of at least 20% of the property value. In some cases, you might need to make more than 20% of the down payment. In Spain, the down payment is around 30% to 40% of the property price.
On the other hand, In Canada, you have to make a down payment of at least 35% of the property value! Moreover, in some countries, down payment is non-refundable for foreign residents. So, double-check everything before making the down payment or you could lose your money!
FAQs about Can you Get a Mortgage from Another Country
Can I get a loan from another country?
Yes, you can get a loan from another country. Every country has specialized financial institutions that offer loans to foreign residents. However, to get a loan from another country you have to fulfill some requirements.
What financial institutes do international mortgages?
Lots of banks and brokerage companies do international mortgages. Some popular financial institutes for international mortgages are –
- HSBC International
- Barclays International Mortgages
- Standard Chartered International Mortgages
- Enness Global
- America Mortgages
What are the eligibility requirements of HSBC International for an overseas mortgage?
Some common eligibility requirements of HSBC International for an overseas mortgage are –
- You must be over 18
- You must live in an approved country
- You must meet income and affordability requirements
- Maximum age limits may apply
Do US banks do international mortgages?
Yes, lots of banks in the USA offer international mortgages to US citizens who want to buy property in another country. However, you should keep in mind that overseas mortgages by USA banks are limited by country or customer needs.
Can I get a UK mortgage for a foreign property?
It is very highly unlikely for you to get a UK mortgage for foreign property. Almost no banks in the UK offer mortgages for overseas property. So, if you are a UK resident then you have to obtain a mortgage from a bank or lender in the country where you want to buy a property.
Last Updated on August 7, 2022 by Ana S. Sutterfield
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.