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17 July, 2015
More and more people are choosing to buy retirement properties overseas, and such properties can offer very attractive prospects on multiple different levels. Even if they are more affordable than equivalent properties in the UK, however, they still represent a big expense and are not to be taken lightly. It is important that you plan your spending carefully before purchase, and make sure you have considered a number of key points.
The first step is to make sure you know how you will afford your property. Releasing equity from your home in the UK, or selling up and moving overseas completely, could be one of the easiest and most accessible ways. If you need a mortgage, then research your options as thoroughly as you can. It is normally best to borrow in the same currency that you receive your income in. This provides you with important protection against currency market fluctuations. If you borrow in one currency and receive income in another, then changes to the exchange rate could mean you have to spend more of your income to cover the same repayment.
It is also a good idea to seek professional legal advice, as you will most likely be entirely unfamiliar with the system in the country your property is located in. This should be a professional, English-speaking adviser who is entirely independent of any interested parties such as estate agents or developers. Particular legal considerations to bear in mind include planning permission and regulatory approval, as some unlucky buyers in the past have purchased properties which have then turned out to be illegal and had to be demolished.
In choosing a property, location is important. You will probably want access to strong transport links, including international transport so you can come back to the UK with relative ease. Good access to key amenities such as shops and healthcare is also important, of course. Prime locations tend to perform best in terms of capital growth, but property prices fluctuate so don't look for a place that you hope will deliver a quick profit over somewhere you will actually want to live in the longer term.
Purchase and Running Costs
Be aware that there could be hidden costs, and there could also be obstacles and problems during the purchase process that could lead to extra outlay. Local taxes and legal or registration fees are good examples of charges which, while not exactly hidden, are very easy to overlook and in some countries these types of cost could conceivably add an extra 10% to the cost of buying your property. Make sure you investigate all the costs involved fully, and still leave some leeway in your budget to deal with the unexpected.
As well as making sure you are prepared for all the costs involved in buying your property, you should make sure you know which costs will be involved in running your property on an ongoing basis and that you will be able to afford them. As well as bills and everyday spending, there might be land taxes to think about. If the property benefits from any communal areas or facilities, there may be fees to contribute to their upkeep. Of course, you will also need to make sure you will be able to afford any maintenance or repair costs that might arise.
For more information or to browse a wide range of overseas investments, please visit the Overseas Investor.
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