3 Ways Top Investors Finance Their Foreign Property Investments

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What do you do when bank financing is not available in your destination country? This article explores other options to finance your foreign property investment.

You’re not getting the same mortgage deal you’re used to

Bank financing abroad will be different from what you’re used to at home. Here are some ways in which the terms will likely be different:

1. Loan-to value ratios will be around 50 to 75 percent of what you're used to.

2. Terms may be shorter. It's almost impossible to get a 30-year loan when buying abroad.

3. You will be offered adjustable interest rates, rather than fixed.

4. You might be required to get a life insurance to secure your loan for foreign property. This isn't good news if you're already around 60, as banks wouldn't borrow you loans of more than 15-year terms. The reason being that insurance companies, as a rule, wouldn't cover you when you're above 75 years old.

Hence, there is need to check out other financing sources.

Financing tips from experts

Generally, here are some financing tips from foreign property experts:

1. If possible when starting out; start small and pay in cash. If this isn't possible, you can use your current home as collateral, without having to rely on banks or regular mortgages. Depending on the amount of equity in your home, you might get lower rates.

2. Research bank financing terms, requirements and laws in your destination country to decide which financing option would work for you. 

3. Since most of what you know about real estate might be ineffective in your destination country, it would be wise to get a partner or local agent. You'll need someone who can offer useful advice regarding financing and home ownership laws in the country.

4. If you'll be transferring funds denominated in your domestic currency, either to make a down payment, full payment or mortgage payments, don't go through the local bank. Local banks, with their wide dealing spread and limited transaction sizes, offer poor Forex services. Foreign exchange services would offer a better deal. 

 

Options to finance foreign property without using the local bank

Here are three options for foreign property investors who don't want to go through the local bank:

1. Personal loans.

Potential buyers with excellent credit will often fund an overseas purchase with an unsecured personal loan for foreign property. Interest rates can be in the single digits for qualified buyers.

Financing with a personal loan avoids the risks that go with leveraging property with a HELOC or cash refinance. This type of financing is particularly attractive when you are investing in a developing country where mortgage rates are high, and the cost of property ownership is relatively cheap.

2. Seller financing.

Some private sellers might be willing to pay part of the price. The conditions will be whatever you and the owner decides, and an average term is up to five years. In most cases, the longer a bit of property has been on the market, the better conditions you can negotiate. Much like bank funding, don't expect the owner to provide the deed until you've finished paying the loan.

3. Home equity (HELOC).

When cash is not an option, tapping into your home equity is one of the easiest ways to finance a property abroad. If you are investing in a country without a developed banking industry, it can also be the cheapest. Getting a HELOC has the added benefit of making you a cash buyer, which provides leverage when negotiating price.

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5 Steps to Successfully Buying Your First Overseas Property

  • 17, August 2023

Buying a home abroad is similar to marrying a foreign lady. It's rare to meet a foreign lady in the bar and get married the next day. It requires some investment of time and effort from the first meet. It might take weeks, months or years to know each other first. Then if she says yes, you tie the knot. Hopefully, you're not going to spend years before you make the 'buy decision, though. That'd defeat the purpose of buying a home abroad. By, using the 'marriage' analogy, buying a home abroad requires knowledge; of the area, country/local rules and the property itself. I hope the analogy sounds pleasant. Marriage is actually more complex.

On how to buy a home abroad, you want to ask some critical questions to determine if the person at the other end of the table isn't just telling outright lies; trying to elope with your cash. This is because sadly, there are few or no safeguards in place to protect you. You want to find an answer to these questions:

* Is the property a good fit for me or my investing strategy?

* What are the zoning laws that apply?

* How trustworthy is the seller?

Once you find answers to these questions, you should follow the below steps to simplify your overseas property buying.

HOW TO BUY A HOME ABROAD

This is just a summary of steps you have to take when you want to buy a home abroad. But, it's important to know that making an overseas property investment might not be a systematic process, there would usually be hoops and turns. A crucial advice for new overseas property investors: don't be in haste or as the saying goes, you might have the opportunity to repent at leisure.

1. Browse properties in a good location. You should check properties online that match your criteria. But don't just browse properties online. Go check out the property physically. Although technology makes it easy to show much of a property online, it is not to be compared to physical examination. If you'll be buying property without physically seeing it, get an agent or any neutral person to take as many photos as possible of the property from many angles so you'll be convinced it'll make a good investment

2. Research the market. While researching the market, make sure you find out about the possibility of getting good ROI on your investment. Developers might pressure you to make a deposit on a new property while you are on visit; promising you quick ROI. You should always wait until you have returned home and had a chance to think about it before deciding.

3. Legal checks. Legal checks and processes can be a major cause of headache when buying property abroad. The process of buying property in many countries follows the same pattern as that of Britain. There is a title which states who owns what and there are contracts to be filled, specifying the owner's commitment to sell the property and the buyer's commitment to buy it. However, legal systems and lingo varies throughout the world and the people involved in the process also vary. It is important that you find out these legal nuances and deliberate on your ability to meet them.

4. Financing. How will you fund the purchase of your property? The two most common ways of funding property abroad are mortgages and taking out a HELOC or home equity loan on your current home. Read this article to find out more on financing foreign property investments (3 Ways Top Investors Finance Their Foreign Property Investments).

5. Invest or buy. If you're investing, you need to be more focused on the financials. Buyers of second home, might also consider letting out to holiday tenants. In both cases, the balance between supply and demand needs to be assessed.

Buying a home abroad can be a life transforming experience or a tragic one. Therefore, you need to make rational considerations and not be ignorant.

By Bebuzee Admin Read More
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Who Else Wants to Move Abroad? 5 Tips for Moving Abroad

  • 28, August 2023

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Moving broad for work or fun is both exciting and frightening, here are some things you should know

An ancient quote says, 'those who travel across the seas only change their skies, but not their souls", nowadays the opposite is true. Studies show that people who live abroad find it easier to engage with other cultures. Moving abroad gives you more perspective on life. But it's not easy to take the first step. The thought of leaving your family and friends can be distressing coupled with the fact that you may not know anybody in the new country. However, it's an opportunity to leave your comfort zone and explore different cultures and issues you haven't seen before.

But there are challenges you'll encounter. Paperwork can be exhausting; The stress of trying to blend into a new environment, especially when you're not fluent in their language; The guilt that comes with leaving your family and friends, which they may not initially understand. But facts prove that the distance could actually strengthen your relationship. So if you're tired of the same old routine and want some more adventure in your life, you'll find that you can master the skill of dealing with the challenges that come with living in a foreign city. Whether you're a millennial moving to another country for work or a retiree just seeking adventure, these tips will help make the move as painless as possible.

Tips For Moving Abroad

1. Make some research. You already know this is important. It's a no-brainer. Know a bit about the political climate of the country, the economic climate, geography and important public figures. Also learn something of the culture, history and staple foods.

2. You don't really need much stuff. Unless you're running away from your home country, never to return, you'll find that excess luggage is just what it's called; excess luggage. It's a given that there will be stores and large shopping outlets in the country you're moving to. Also leaving back the excess stuff might be a way to dispose of materialism and reprioritize what's important in your life. However, never forget to take the important stuff. Don't forget to take your favorite 'Abercrombie' shirt or else your mind might not leave home.

3. Don't expect to settle in at once. It might take at least three months before you fully integrate with the culture of a particular place. You might find it hard to make friends during this time. So, don't rush and don't feel like you've to immerse completely while trying to socialize but stretching your limits of comfortability. During this time, you can observe. Also, maybe, get some interesting 'alone' activities to keep it fun.

4. Experience new things. Travelling abroad and not trying new foods, people and customs is like going to school and not learning anything. Don't be afraid to experience new things. Also, don't limit yourself to the big cities. If you travel to Spain, don't spend all your time in Madrid. Check out the smaller town, you'll learn and experience much more.

5. Make local friends. As a new property investor abroad, your local friends will be able to assist you a lot. They'll give you practical information and might even put in some legwork for you. Generally, you're not moving abroad to hang out with fellas from your home country. Therefore, mingle with the locals.

 

 

 

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5 Easy Home Design Ideas to Make Over a Room

  • 02, September 2023

What goes on in your head when moving into a new home? Foremost, how do I turn this empty shell of a house into an inviting home that reflects my own personal style? You don't want a bland and boring house. Your new house offers a new start. You can eliminate the junk and put in new digs; you can buy that bed you've always dreamed about; or beef up the kitchen and dining area for maximum comfort and entertainment. The great thing about home decoration is that you have the chance to improve your home's appearance without spending much money. Let's look at some home design ideas for giving each room in your house a makeover.

 

When giving a home a facelift, sometimes simple solutions can have a big impact. Here are some inexpensive home design ideas to give rooms a new lease of life.

 

1. Don't rush. You need to take a little time before starting major decor projects in your new home. Take some time to let in the feel and observe what the home needs before buying major stuff. HGTV recommends staying in the house for two months before making significant purchases. You might be spending money on the wrong areas. For example, instead of spending $5,000 on revamping and putting new features in your bathrooms, you might find out that you could spend half the price to get your bathroom in great shape.

 

2. Add color to walls. For people who get out early, a light shade will do while a deep tone will make the house more homely for those who spend more time indoors. You can also make a statement with a feature wall. Adding a lick of paint to your walls is an inexpensive way to give your room an instant lift. Whether you decorate your entire room in an intense shade or opt for a stylish two-toned plan, fresh color on your walls guarantee oodles of glamor.

 

3. Pare down. Now it's time to reassess and evaluate what works and what doesn't. Don't pack everything from your old home over. You don't really need everything you've accumulated. They will only make rooms stuffy. Having a new house gives you chance to try out a fresh approach. This means you can pare down on tired pieces that will only clutter up your space. You can sell these items off on eBay or drop them off at a charity shop.

 

4. Use right lighting. Transform the mood of rooms at a cheap price with the right lighting. You can also invest in dimmers to switch from bright to low lighting. When decorating bathrooms, try out stylish lights. For bedrooms, buy a fresh shade for lamps. You can give your room a cohesive style with stylish lighting.

 

5. Update roller blinds. Whether you go for a subtle floral pattern or statement stripes, roller blinds for your windows are great low-cost, high impact options for designing rooms. They can transform your dull windows and complement other designs in your room.

Less is often more when decorating and less is also eco-friendly. No matter how small your space, you can always let your creativity shine through.

 

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