Bridge the Gap to Own a Holiday Home
The housing situation for most would-be buyers in the UK right now is pretty bleak. Particularly for first-time buyers – millions of whom face the prospect of never owning their own home.
But what’s interesting is how at the opposite end of the spectrum, individuals interested in buying second homes (or holiday homes) are increasingly setting their sights overseas. Given the inevitable complications of buying abroad, why are more Brits than ever before considering international property investments?
The Overseas Property Market
For most, the primary motivating factor is affordability. In some regions, average property prices have plummeted by as much as 70% over recent years alone. As a result, Brits buying abroad are able to make their budgets stretch considerably further than they would at home.
What’s more, the desire to snap up bargain properties while the opportunity exists is prompting a growing number of borrowers to consider more immediate short-term loans.
Florida has become an appealing investment prospect for more British homebuyers than ever before. Primarily due to sub-prime issues, average house prices in several attractive regions across Florida have fallen by more than 70%. Over in Spain, research suggests there are currently more than 700,000 unsold holiday homes, which are plummeting in value all the time. In addition, average house prices in several key coastal regions have fallen by around 50%.
For some, the appeal lies in the prospect of purchasing an attractive overseas property to let out. For others, it’s a case of being able to pick up a dream holiday home at a bargain price. Or perhaps, a second home to eventually move to for permanent residence during retirement.
However extensive or limited their budget may be, would-be buyers are finding overseas investment opportunities near irresistible.
Local Mortgage Complexities
One of the biggest obstacles standing in the way of overseas property ownership tends to be arranging finance. For obvious reasons, getting a local mortgage from an overseas lender can be far more complex than organising a mortgage at home. Lending criteria and eligibility in general differ significantly from one lender to the next – as do interest rates and borrowing costs.
For most, it’s a case of hiring a local lawyer and/or real estate expert to represent them in their absence. All of which means further costs and complications. It can also be a time-consuming process, which isn’t ideal when the intention is to secure a bargain property while the opportunity exists.
Bridging Loans to Purchase Overseas Homes
This is perhaps why bridging loans have become a popular choice among Brits buying abroad. With so many quality properties being sold for exceptionally low prices, it’s very much a case of first come, first served. Procrastinating for as little as a few days could see the property of your dreams being snapped up by someone else.
Traditional mortgages (at home and abroad) have a tendency to take several weeks to arrange. With a bridging loan, the money needed to pay for a property outright can be accessed in as little as three days. Just as long as the applicant has sufficient collateral to cover the cost of the loan, the application process can be surprisingly simple.
Of course, the key proviso with a bridging loan is ensuring you have a valid exit strategy. That being, a plan for repaying the loan in full a few months down the line. Bridging loans are therefore unsuitable for buyers looking to spread the costs of their property purchase over several years, but can be uniquely cost-effective for those able to repay more promptly.
With such a broad range of options available for financing an international property purchase, it’s important to seek independent advice at the earliest possible stage. Consider the available options, establish your budget and conduct a whole-of-market search, in order to ensure you get the best possible deal from a reputable lender.