Before you make an offer on a holiday home abroad, ask yourself:
Have I found the right property?
You probably have an idea of the country you wish to buy your holiday home in — but it's also important to have a clear idea of what you are looking for in your property (for example, number of rooms, swimming pool, access to local facilities, new build, character property etc).
Take the time to research suitable properties in your preferred location. Consider the amenities in the surrounding area as well as local infrastructure (quality of roads, transport links etc).
Speak to local estate agents to make sure you have found the property that best meets your specific needs.
Can I afford the initial investment?
To work out how much you can borrow and what the repayments will be, use our mortgage calculator.
Have I budgeted properly?
Speak to local estate agents to find out what taxes, transaction costs and ongoing expenses you need to budget for, as these vary from country to country.
Ask yourself: Is your property ready to move into or will it require extra work? Is it furnished or do you need to set aside finances to fit it out it to your taste? Who will maintain the property when you aren't using it, and how much will this cost?
How much will it cost to let, and what rents can you realistically expect — seasonally and yearly? Will anticipated rents cover your mortgage payments if you are buying to let?
How safe is my purchase?
When buying property overseas, it is important to use an independent lawyer who is familiar with the purchase process in the country and can check the title deeds to ensure full due diligence is carried out on the property (ie that the seller owns it and there are no debts outstanding on the property that you may be liable for). Choose a lawyer who represents your interests, not those of the developer or seller.
Do I want to make money?
While it may not be your primary motive for buying the property, you may wish to rent out your property to holidaymakers when you are not using it.
Research average rental income for the area and ask whether it will cover associated costs, such as management fees and insurance.
Will the property you have chosen appeal to holidaymakers? Is it in a location that will attract large numbers of tourists, and how long is the average tourist season?
If you are intending to rent out your holiday home, it is important to speak to your lender.
How much tax will I have to pay?
Check local property tax laws and make sure you know the levels of tax you'll be paying on rental profits if you choose to rent your property.
If you're living in the UK, you'll need to pay UK taxes on the income as well — but you might be able to apply for double tax relief. It's also advisable to check local laws on inheritance tax. If you're a Lloyds TSB International Account customer you can get tax advice through our partners.
How will I rent my property?
A good first step to finding tenants for holiday lets is to contact local estate agents, letting agents, holiday companies and tourist boards. For a first time landlord, renting to a friend or someone recommended can be a reassuring route to take.
If you won't be residing in the country, and especially if you don't speak the language, it's a good idea to put your property in the hands of a reliable agent. The agent can organise contracts, resolve any issues with your tenants and oversee the property in your absence.