How a Remortgage Can Be The Driving Force Behind Buying That Holiday Home You’ve Always Dreamed Of
Millions of Brits aspire to owning a holiday home. The popularity of television shows such as A Place In The Sun and the increased number of low cost airlines has made it easier than ever to hop on a short flight to your holiday home abroad.
It is now estimated that over one million Brits owns a holiday home overseas. When buying a holiday home the most important factors appear to be a warm climate, a wide range of things to do and proximity to the sea. In 2008, the most popular country for British sun seekers buying abroad was Spain, followed by France, then the USA and then Turkey.
With more and more low cost airlines now flying to previously out of the way destinations, many Brits are also snapping up properties in emerging countries. Portugal, Malta and Cyprus have all been popular with buyers over recent years and many have even bought in locations further away such as Dubai or Brazil. And, conversely, many Brits have also bought holiday homes in rural or coastal locations in the UK.
IF you are considering buying a holiday home, the first step should be arranging the finance that you need to complete the purchase. Few people have the cash to buy an overseas property outright. It is therefore likely that you will have to take out some sort of mortgage in order to raise the funds you need.
These days, it is possible to raise a mortgage in the country where you are buying. Many lenders across the globe will now consider a foreign currency mortgage secured on the property for Brits buying real estate in that country. So, you can take out a Euro mortgage, a dollar mortgage or a mortgage in many other currencies depending on where you are buying.
Whilst overseas mortgages are more readily available, there are some disadvantages to them. For example, if the value of the pound falls against the currency of your mortgage, you will potentially be out of pocket. Also, there can be a language barrier and overseas mortgages sometimes do not work in the same way as a home loan in the UK, making them more difficult to understand.
Many Brits buying abroad therefore presume to avoid exchange rate uncertainty and the complexity of overseas loans and to borrow the cash that they need in the UK. A remortgage allows you to raise the funds needed to buy your holiday home as part of the process of switching your mortgage from one bank or building society to another.
To be able to remortgage and obtain a further advance (additional funds), you will need to have enough equity in your property, which is the amount of the property that you own which has no debt on it. This is required to reduce the loan to value amount on your new mortgage.
You will be able to choose a fixed or discounted or tracker mortgage rate for the whole borrowing. As with all mortgages there is one affordable monthly repayment. You will then be able to use the additional funds borrowed towards the purchase of your dream holiday home, whether that is in the UK or overseas.
If you want a piece of the dream, owning a home abroad, and a chance to join the one million Brits that already have an overseas property, a remortgage could be the ideal way for you to access the cash. It is no way near as high a risk undertaking as taking out a foreign mortgage, and you won’t have to worry about the fluctuating exchange rate risk. You will also have fewer headaches with foreign language and cultural difficulties when arranging finance.
Timothy Frodsham writes for JustRemortgages.com one of the UK’s
top sites for the latest remortgage rates and best remortgage deals.