Buying a holiday home abroad: mortgages and property

An easy guide to buying a holiday home abroad

Why buy a holiday home abroad?

The most common reasons for buying a holiday home overseas tend to come under two headings: investment and personal use. Often your reasons may be a combination of the two, and include factors like these:

Lower-cost holidays in a country and location you know and love
the option of retirement overseas, or a pension investment as part of your portfolio
a property for friends and family to enjoy

Things to think about when you choose a holiday home abroad

Choosing the right holiday home

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.

Choosing the right overseas mortgage for you

Choice and cost are the most important criteria when choosing any mortgage, which you'll want to match up to your personal needs as much as possible.

When considering a lender for the purchase of your overseas property, consider these questions:

Can you get a mortgage in the country you're interested in? Does your lender offer mortgages in your favourite holiday destination?
Can you get a mortgage in the currency that suits you? And does your lender allow you to switch the currency of your mortgage to reduce the value of the debt?
What fees or penalties are associated with the mortgage? Are there penalties for early repayment or buy to let properties, and how much will you have to pay for valuation and insurance?
What is the maximum repayment term? And what age limit is applied to the longest loan term?
Does your lender provide associated services? Do they work with legal or tax advisers to handle more complex queries related to your property and the country and you are buying in?

Arranging a mortgage for a holiday home abroad

At Lloyds TSB International, we arrange mortgages for overseas homes in a range of countries. See the International Mortgages country list.

We can arrange a mortgage for a particular property, or give you a decision in principle to help you strike a deal with sellers and estate agents.

To check you're eligible for an international mortgage and start the application process, go to ready to apply.

For more information about the process, call or contact us online.

Getting an international bank account

You'll probably receive your rental income in local currency. To make it easy to access the money wherever you are, open a Lloyds TSB International Account.

Why choose Lloyds TSB International for your international mortgage

Lloyds TSB Offshore was named Best Overseas Mortgage Lender 2 years running (2007-2008 and 2008-2009) by Your Mortgage.

We offer flexible international mortgages at competitive rates of interest. See our rates, charges and conditions.

You can alter your mortgage to suit changing circumstances by switching it between the currency of your main earnings and the currency of the country your property is located in.

With the support and security of a trusted British bank, you can feel confident that you're protected against local financial instabilities.

See more reasons to choose Lloyds TSB International.

Useful links

YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED ON IT. Lending is at the Bank's discretion and you must be 18 or over to apply. Security will be required.

Please note that this service is principally designed for customers planning to purchase properties outside their country of residence. We can provide mortgages for owner occupation in Hong Kong and Singapore, but not in other countries. Other restrictions related to property use may also apply and details are available upon request.

Mortgages can be arranged in 10 currencies however the currency must be the same as your main income or the local currency of the property location.