Dreaming of a Holiday Home? Then Learn How a Remortgage Could Help
- By Howard Ogollegos
- Published 09/25/2011
- Real Estate
- Unrated
Millions of Brits aspire to owning a holiday home. The popularity of television shows such as A Place In The Sun and the increased number of low cost airlines has made it easier than ever to hop on a short flight to your holiday home abroad.
It is now estimated that over one million Brits owns a holiday home overseas. When buying a holiday home the most important factors appear to be a warm climate, a wide range of things to do and proximity to the sea. In 2008, the most popular country for British sun seekers buying abroad was Spain, followed by France, then the USA and then Turkey.
Other countries such as Bulgaria are also extremely popular, due to the lower property and land prices of developing areas. These are seen as a much better investment as the potential for growth is huge in comparison to countries that are already built up and at their peak.
If you are considering buying a holiday home, the first step should be arranging the finance that you need to complete the purchase. Few people have the cash to buy an overseas property outright. It is therefore likely that you will have to take out some sort of mortgage in order to raise the funds you need.
A growing area for borrowing is foreign currency mortgages. These loans are increasingly widely available for people looking to buy in a particular country. It is possible to have a mortgage in currencies such as dollars, Euros or in another currency based on the economy you are buying into. Lenders in foreign countries will consider British buyers a safe bet, and there will be plenty of security in the property in the event
of a default.
One of the main disadvantages of taking out a foreign currency loan is that the exchange rate can move against you. If the value of the pound falls against the currency in which you have borrowed, you can lose money. In addition, it can be difficult to get to grips with understanding the complicated terms used in a foreign currency mortgage.
It is therefore a far more popular option to remortgage your home, and borrow additional funds in order to purchase a second home abroad. This option is no different to any other remortgage, however as you will be using the additional funds to secure property the acceptance rate is far higher than for instance remortgaging to pay unsecured debts.
Remortgages are based on two main criteria. Firstly, you need to have some equity in your home. You can normally arrange a remortgage up to around 75-90 per cent of the value of your home including the additional borrowing you need to buy your second home. You will typically also have to provide to your remortgage lender that you have sufficient income to repay the loan.
You will be able to choose a fixed or discounted or tracker mortgage rate for the whole borrowing. As with all mortgages there is one affordable monthly repayment. You will then be able to use the additional funds borrowed towards the purchase of your dream holiday home, whether that is in the UK or overseas.
A remortgage can be the ideal way for you to fulfil your dream of buying a home in the sun. It doesn't involve having to arrange a complicated overseas mortgage and there is no exchange rate risk involved. You simply have one loan with one UK lender and can also benefit from a great fixed or discounted rate on your total borrowing.
It is now estimated that over one million Brits owns a holiday home overseas. When buying a holiday home the most important factors appear to be a warm climate, a wide range of things to do and proximity to the sea. In 2008, the most popular country for British sun seekers buying abroad was Spain, followed by France, then the USA and then Turkey.
Other countries such as Bulgaria are also extremely popular, due to the lower property and land prices of developing areas. These are seen as a much better investment as the potential for growth is huge in comparison to countries that are already built up and at their peak.
If you are considering buying a holiday home, the first step should be arranging the finance that you need to complete the purchase. Few people have the cash to buy an overseas property outright. It is therefore likely that you will have to take out some sort of mortgage in order to raise the funds you need.
A growing area for borrowing is foreign currency mortgages. These loans are increasingly widely available for people looking to buy in a particular country. It is possible to have a mortgage in currencies such as dollars, Euros or in another currency based on the economy you are buying into. Lenders in foreign countries will consider British buyers a safe bet, and there will be plenty of security in the property in the event
One of the main disadvantages of taking out a foreign currency loan is that the exchange rate can move against you. If the value of the pound falls against the currency in which you have borrowed, you can lose money. In addition, it can be difficult to get to grips with understanding the complicated terms used in a foreign currency mortgage.
It is therefore a far more popular option to remortgage your home, and borrow additional funds in order to purchase a second home abroad. This option is no different to any other remortgage, however as you will be using the additional funds to secure property the acceptance rate is far higher than for instance remortgaging to pay unsecured debts.
Remortgages are based on two main criteria. Firstly, you need to have some equity in your home. You can normally arrange a remortgage up to around 75-90 per cent of the value of your home including the additional borrowing you need to buy your second home. You will typically also have to provide to your remortgage lender that you have sufficient income to repay the loan.
You will be able to choose a fixed or discounted or tracker mortgage rate for the whole borrowing. As with all mortgages there is one affordable monthly repayment. You will then be able to use the additional funds borrowed towards the purchase of your dream holiday home, whether that is in the UK or overseas.
A remortgage can be the ideal way for you to fulfil your dream of buying a home in the sun. It doesn't involve having to arrange a complicated overseas mortgage and there is no exchange rate risk involved. You simply have one loan with one UK lender and can also benefit from a great fixed or discounted rate on your total borrowing.
Howard Ogollegos
Howard O'Gollegos writes for JustCommercialMortgages.com the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.
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