Real estate abroad: is it better to borrow money at home or abroad? | Personal Finances | Finance
There are benefits and risks to both options, so it’s worth taking the time to fully understand each choice so you don’t get caught.
In terms of ease of access, you will likely find it easier to get financing in the UK as you will have a domestic payment and borrowing history to help a lender assess your ability to repay the loan.
Your credit score is not an international measurement – different data protection laws around the world make it difficult to share personal information across borders, so a good credit score does not necessarily apply abroad.
Of course, you can get a copy of your UK credit report and present it to a foreign bank, which may help them assess your claim, but this does not guarantee that you will be treated as favorably as a national with a good national credit rating.
The other problem with getting an overseas mortgage is that you won’t have the same protections as if you were dealing with a UK institution.
Bodies like the Financial Ombudsman Service can only deal with complaints about businesses operating in or out of the UK, while the Financial Conduct Authority (FCA) only regulates UK businesses. mortgage.
However, borrowing abroad can offer financial advantages, as you may be able to benefit from lower interest rates abroad, although you will likely have to offer a larger deposit than you would have in the UK. United.
For example, interest rates in the Eurozone are on average much lower than those in the UK, which means it could cost you less over the life of the mortgage.
You will need to consider the impact of exchange rate fluctuations on your mortgage premiums when deciding whether to borrow at home or abroad.
For starters, the going market rate will affect how much you actually need to borrow.
Suppose you were considering buying a property in Spain for € 200,000, two months ago you should have borrowed £ 175,746, but at the current rate you would only need £ 169,204.
Exchange rates are in your favor right now, but they might not be in a few weeks or months, borrowing abroad cancels that out to begin with because you don’t have to think about the exchange rate right away.
However, you will need to consider how exchange rate fluctuations affect the amount of money you need to transfer from the UK to pay your premiums overseas.
With exchange rates fluctuating by several percentage points per month, your premiums could be significantly higher or lower each month.
While this can benefit you in the long run, by reducing the overall amount you actually have to pay in British pounds, it could also make you overpay, as well as making it harder to budget your finances on a monthly basis.
So when you are considering borrowing money in UK or overseas the question you need to ask yourself is’ Do I want to take the risk of currency exchange now by borrowing in UK? United or at a later date by borrowing abroad? “