Overseas Mortgages: The Complete Guide To Buying Abroad

About This Guide

Buying a property abroad can be both exciting and daunting. If you are thinking of applying for an international mortgage, do you know:

• How to proceed and who arranges the financing.
• Why an overseas lender might turn you down.
• How long the process takes compared to local markets.
• How to protect your deposit if the mortgage falls through.
  

In this guide to overseas mortgages, expert Simon Conn answers the most common questions about international property finance, covering deposit rules, critical risks, and how to make informed decisions.

Scroll down to read this guide or download the printable version here.

Listen to our deep-dive into this topic or read all of the crucial information below.

Key Takeaways

• • Specialist Brokers Essential: UK high-street banks rarely lend on foreign property, making specialist international brokers the primary route to access private banks and local lenders.

  • Higher Deposits Required: Lenders view non-residents as higher risk, often requiring deposits of 30–50% depending on the country, with Italy being particularly conservative.

  • “Subject to Mortgage” Clause: To protect your deposit, always ensure your lawyer inserts a clause making the purchase conditional on securing an acceptable mortgage offer.

  • Exclude Rental Income: Affordability is typically based solely on your stable existing income, as most overseas lenders will not factor in potential rental income from the property.

  • Manage Currency Risk: Exchange rate fluctuations can significantly increase costs between the offer and completion; using a forward contract can lock in your rate.

  • Budget 10–15% Extra: You must account for significant additional costs on top of the purchase price, including local taxes, notary fees, legal expenses, and surveys.

Buying a property overseas and getting a mortgage for foreign property

Securing a mortgage for a foreign property, whether for a holiday home, relocation, or investment, is significantly more complex than buying in the UK. Understanding how overseas mortgage loans work is essential to avoid unexpected costs, delays, and unnecessary risk. With proper preparation and clear professional guidance, these challenges can be anticipated and managed effectively.

What is an international or overseas mortgage?

An international mortgage is a loan secured against a property located outside the country where you currently reside. Most mortgages are arranged by a lender in the country where the property is located, although larger loans may sometimes involve international or private banks.

International purchases generally involve higher deposit requirements, stricter lending criteria, and significant foreign-currency risk. Simon Conn recommends a triad of independence: an independent lawyer, an independent valuation, and professional translation of all contracts.

Property ownership rights and lending rules vary by country, and not all jurisdictions allow foreigners to freely buy or mortgage property. This is why understanding the process of getting a mortgage for foreign property is so crucial before committing.

How to get a mortgage for a property abroad

UK high-street banks rarely offer mortgages secured against an overseas property. Most withdrew from this market many years ago, following the last major economic crisis in 2007/08. Financial availability also depends on local laws, as some countries restrict foreign ownership of property.

You generally have four professional routes for how to get a mortgage for a property abroad:

1. Specialist international mortgage brokers (recommended) – Access to private banks and local lenders not visible to the public.
2. Local lenders – For example, French, Italian, Portuguese, or Spanish banks (read our dedicated guide on how to get a mortgage on a Spanish property). These may offer competitive local rates but involve bureaucracy and strict non-resident requirements.
3. International banking services – Providers include expatriate or private banking divisions, typically for clients with high incomes or liquid assets.
4. Equity release – Refinancing your own locally-basedproperty to purchase overseas as a cash buyer, subject to available equity, lender criteria/loan-to-value limits and subject to your overall personal financial profile.

These options form the foundation of international mortgage plans, allowing you to compare terms and choose the option that best fits your circumstances.

Overseas lending: How it may differ from your local criteria

Deposit requirements

Lenders view non-residents as higher risk. Typical maximum loan-to-value ratios include:

Failure to budget for additional purchase costs, such as local taxes, notary fees, legal expenses, and surveys, can undermine affordability assessments and result in mortgage refusal.

Please note that some countries require that your deposit and any setup costs be funded from existing savings/resources, not through additional borrowing.

Employment and income criteria

Overseas banks place heavy emphasis on income stability. Probationary periods must be completed, and self-employed applicants generally need 2–3 years of audited accounts. Net income after tax is used for affordability, and total debt commitments usually should not exceed 33–35% of net income. Declining profits or high personal expenses are common reasons for rejection.

If you have changed jobs but remain in the same field, lenders may still require at least 12 months’ experience in your new role before considering your application. If there is a probationary period, most lenders will not proceed until it is finished.

Please note that some countries do not include rental income, currently or to be received, in any affordability calculation.

Land and construction

Overseas lenders will not finance land purchases alone. Plots are usually purchased in cash. Construction funds are typically released in stages and only once planning permissions and building licences are verified.

Critical risks and protections

The “subject to mortgage” clause

Always ensure your independent lawyer inserts the wording “subject to an acceptable mortgage offer” into the sales contract before any deposit is paid. This ensures that if your mortgage is declined, there are any unforeseen legal issues with the purchase (such as buying property in Cyprus with no title deed), or the property is down-valued, your deposit is refundable.

Foreign currency volatility

Borrowing in Sterling to purchase a Euro or Dollar property introduces exchange-rate risk. Even a slight movement can significantly increase costs. In January 2020, a couple agreed to buy a €300,000 property when the rate was 1.1866 (£252,823). By completion in April 2020, the rate had dropped to 1.1462, increasing the cost by £8,911.

A forward contract with a currency specialist can allow you to fix your exchange rate at the point of paying your deposit. To help clients with this, Simon Conn partners with Moneycorp, award-winning foreign exchange specialists with over 40 years of experience. They provide competitive rates, tools to lock in favourable rates, and expert guidance on timing and transfers for large property payments. Using overseas mortgage funds through a specialist like Moneycorp can reduce costs compared with high-street banks. 

High-street banks often charge up to £30 per transaction and can potentially offer poorer exchange rates. For ongoing costs such as pension transfers or maintenance, this difference can amount to nearly £400 per year.

Timelines and deadlines

International purchases usually take two to six months. Common delays include national and regional holidays, lengthy legal verification processes, mortgage underwriting, valuations, and developer delays on off-plan properties. Your lawyer should obtain financial references on any developer to confirm they have the funds to complete the build.

In some countries, both national and regional holidays can temporarily halt legal, banking, and notarial processes, significantly extending purchase times.

Buyers should be cautious of fixed completion deadlines imposed by developers or agents, particularly where mortgage approval and legal checks are still ongoing. Some contractual timelines may be driven by national laws rather than practical feasibility. Researching a developer’s past delivery record and ensuring your lawyer checks financial references can help protect against unreasonable or unachievable deadlines.

Frequently asked questions (FAQ)

Can I get a buy-to-let mortgage abroad?
Yes, but it could be stricter than your local market, and the lending criteria, including loan-to-value and interest rates, may be more onerous. Rental income is usually excluded from affordability calculations. Crucially, even if the lender permits renting, you must check with a local lawyer to determine if specific permissions or rental licenses are required by local law.

Is there an age limit for international loans?
Yes. Limits vary by country. France often requires loans to be repaid by age 75, while Spain may allow borrowing up to age 80.

Do I need a solicitor?
Yes. Ideally, one qualified professional in the country where the property is located who understands local laws and procedures.

What if I have bad credit?
It is unlikely you will secure a loan if you have any past adverse credit history, regardless of the circumstances. 

What hidden costs should I expect?
Local taxes, notary fees, legal costs, and surveys can add 10–15% to the purchase price, depending on the country.

Ready to discuss your overseas purchase?

Do not risk your deposit on a property you cannot finance. Complete our assessment to confirm your eligibility with our panel of international lenders, even if you do not have a specific property in mind at this time; examples will suffice (e.g. web links, etc.) This step can help you understand overseas mortgage loans and plan effectively.

Warning: Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Changes in exchange rates may increase the sterling equivalent of your debt.