Buying Property Abroad

Published:  29 Oct at 7 PM
One of the hardest things when moving abroad is to actually find a property that meets both your requirements but also your budget. This process becomes even more difficult when you are thinking of retiring abroad, as you need to consider not just your current situation but for the foreseeable future. For example, at 65 you may be retiring abroad and looking forward to a secluded villa on the coast. The mere thought of that sounds pretty amazing but 15-20 years down the line when you’re 80+, the chances are that this seclusion is a major inconvenience when it comes to getting to the local shops or town. So the first step when searching for a property abroad is to really think about the location and the potential problems you may have from it both now and in the future.

When you have your location, use the internet to look at properties and try and organise a trip to the destination during which you can visit the properties you have marked down as potential purchases.

When it comes to the point where you are required to pay for the property, one of the key things to consider when transferring larger sums abroad, is that even small differentials in exchange rates can make a huge difference to the amounts concerned. Even a small increase of 1% on a £100,000 fee is £1000. This is a lot of money in it’s self but when you think that many transfers even on a personal level top £1million, the increase (or decrease) can often be over £10,000, so it is essential that you get the best exchange rate.

Another common suggestion is to make sure you fix foreign exchange rates when agreeing to purchase a property. A forward contract is a much needed way of fixing the exchange rate at a specific value for a set period of time. A forward contract allows you to remove uncertainty from your currency transfer. You will know precisely the amount you would be paying for the property from the moment you agree the forward contract exchange rate. Without a forward contract you are putting yourself at risk that currency fluctuations could result in you paying more both in terms of the mortgage and the actual purchase price.

As tempting as it is, it’s important not to take a gamble on these exchange rates. Very few people can afford to leave purchasing the foreign currency until late on in the property purchase process and even those who can afford it, are rarely stupid enough to do so. It may work in their favour and they may get a very good deal but the chances are that by leaving it until the last minute, you will end up paying more than you need to and as earlier discussed, could cost you a lot in the long term. Spend time researching the exchange rates and the various organisations you may use in order to exchange this currency.