Many UK dwellers have a dream of moving to sunnier climes, whether it being for retirement or earlier in life! Chances are, you’re pretty well grounded and uprooting your whole life and moving across the sea should not be taken lightly! There will be much to think about from selling your property before you move, to the transportation of all your belongings and very importantly, how to get a mortgage in this new and foreign land to make it all happen?
The first, and most pertinent question, is do you borrow from the UK or from the country you’re moving to? As you can imagine, there are benefits to both.
Borrowing from a UK bank to fund your move abroad.
The most obvious benefit to borrowing from a UK lender, is that you already have an existing financial history in the UK. You have a history of domestic payments going out of your accounts for your regular outgoings, such as utilities, other bills, and your rent or existing mortgage. Couple this with the record of regular incomings into your account and the lender has a solid financial history with which to base your ability and trustworthiness to pay back the amount you would like them to lend to you.
In addition to this, you will have likely, over the years, spent time nurturing and building up your credit score. This is not an international measurement, as varying data protection laws make it difficult to share such personal and financial information across the world. If your credit score is strong in UK, this may not count towards anything abroad.
The other benefit with borrowing from a UK lender, is the protections that you will be entitled to. UK bodies such as the Financial Conduct Authority (FCA) and Financial Ombudsman Service only regulate and deal with complaints from UK companies, and therefore would not be able to help you with any issue you may run into with an overseas mortgage.
Most of the UK high street banks will have an international mortgage service, you’ll just have to find out which countries they deal with before choosing which one will work for you.
Getting an overseas mortgage for anywhere in Europe should usually be quite straight forward, however if you’re looking to moving further across the world, this may be a more complicated process.
Borrowing from an overseas lender to fund your move.
Borrowing from a bank in the country you intend to move to can, of course, have its benefits. As mentioned above, your credit score doesn’t travel with you outside the UK, so if your score has become a little under healthy, borrowing from abroad may allow you to negate this issue.
You also may be able to benefit from much lower interest rates than you may be able to attain in the UK. This could have a sizeable benefit to you over the lifespan of your mortgage repayments.
You’ll also need to bear in mind the potential effect of fluctuating exchange rates when making the decision of whether to borrow from the UK or abroad.
For example, the current financial climate may mean than the exchange rates fall in your favour; but a few months or years down the line, this could be subject to change. If you choose to borrow from a bank in your new country of residence, this will allow you to live without constant thought of the fluctuations of current exchange rates.
Exchange rates can be volatile, so borrowing abroad could give you some peace of mind to this end.
Of course, the mortgage world is complex and there’s far more to consider than we’ve been able to fit into this short guide. Each individual’s personal situation will also affect which option is best for them. We’d recommend heading over to Propillo who have some great guides, mortgage calculators and can offer personalised advice into what could work best for you.