How to Get a Loan for Overseas Property
America is a great country and you enjoy working here. But, you are thinking about buying land back in your home country. Whether this is to eventually retire there or just to diversify your investment portfolio, buying land in a foreign country can be tricky. Plus, you want to make sure you make the right financing decision.
Below we’ll walk you through the process of buying property abroad and how to get a loan for an overseas property.
Why It’s a Great Idea to Invest in Property Overseas
Buying a property definitely classifies as an investment. You are about to invest money into something that has the potential for growth. Every additional amount you spend on property infrastructure will also increase its market value. Here are a couple of reasons why it’s a great idea to invest in property overseas.
Earn Income Abroad
Buying property in another country is a great way to diversify your investment portfolio. Owning and renting a property out in another currency can help to lower the risk profile of your current investments.
Benefit from Owning a Property Abroad
Owning a property outside of the U.S. makes it easier for you to get financial services abroad. You’ll have greater access to credit in that country, as you own something of value in that country. It can also serve as some form of security when you apply for any other form of financial services.
Retire Outside the U.S.
Having property in another country means you’ll have the wonderful opportunity of retiring outside of the U.S. Taking your dollars to retire in a cheaper country can give you an easier retirement budget as some countries have lower average living costs when compared to America.
Some Considerations Before Buying Land in Another Country
Buying property overseas is a great idea. But, here are a few things you still should consider before you commit to buying property overseas.
The Cost of Living
Ideally, you want to buy property in a country where the cost of living is lower than where you currently are in the U.S. Do some research into the cost of living in the area you are considering. Make sure the cost of living won’t weigh you down. You want to choose a good place to invest in.
There are countries with tricky property ownership laws. Make sure about your eligibility to own land in the country of your desired property investment. Gain the right to own land in that country before you set your heart on a property.
Just like in the U.S. some countries have specific taxes on properties. Take these expenses into account when you are planning the purchase and maintenance of your new property. You don’t want to buy a property just to lose it a few years down the line because of poor tax planning.
Financing property overseas can be tricky. Getting a mortgage in the foreign country means you’ll need a very big down payment and you’ll probably also be paying super high interest rates. You might also be required to get a new life insurance policy so your new mortgage is secured in case something happens to you. There are easier ways to finance your new property. Consider getting a loan in the U.S. We take a look at how to get a loan for overseas property below.
Your Exit Strategy
It’s important to have a good, flexible exit strategy once you are ready to move into your house abroad. It may take you a while to get all your things in order before you can leave the U.S. Streamline your plans and give yourself enough time. You may want to sell off different assets in the U.S. before you can make the move to your new home.
How to Buy Property Overseas
Keen to go ahead and invest in property abroad? Let’s take a look at how you can go about it.
Identify Areas to Invest In
Do the research and speak to friends and family. Make an informed decision about the areas you are considering. You can ask local professionals to help you out. You don’t want to encounter any unwanted surprises down the road.
Look at the Long-Term Real Estate Trends
Property in the same country can have different trends. It’s all about location. There are numerous factors that affect property value. Research the area and the types of properties similar to the one you are interested in. The history of an area can give good indications of the potential for growth of the property you are interested in.
Research the Market Forecasts
Economists and financial experts will be of great help here. See what is expected of the country and area you would like to invest in. You want to buy properties in places that has a potential for growth.
Research the Legal Matters
Owning land in a different country has a legal side to it. It can come with a lot of red tape. Research the necessary processes or documentation required for you to own land. Also, make sure you’ll be able to gain visas or residency in the country of your new investment should you want to go visit.
Ask For Professional Help
When buying property in a different country, it is essential to get expert help. Real estate agents exist for this very reason. They want to help you make the best decision as fast as possible. International real estate agents have great insight and advice about the places you are interested in. They often have people on the ground where you might be thinking of investing who can give you localized advice and information.
Once you’ve got all the steps down and you are ready to buy, you’ll need to finance your new property. You can use a personal loan to do just that!
How to Use a Personal Loan to Buy Property Overseas
Let’s take a look at how to get a loan for an overseas property.
1. Determine Your Need
Plan your needs. Draw up a budget to see exactly how much funds you’ll need to purchase and maintain your new investment.
2. Apply for a Loan
There are many lenders out there who offer personal loans. Some lenders might be more tailored to your specific needs and borrowing profile. So shop around and do your research. Find a loan for which you’ll be eligible.
Once you’ve found one or two lenders who can work, you can do a pre-approval or full application to see what they offer you. Just keep in mind a full application means the lender will do a credit check and too many credit checks can knock your credit score.
3. Receive Your Offer
Loan offers will come in as you complete the application processes and lenders confirm whether you are eligible. Complete any follow-up calls and accept the offer you deem as the best. It is a good idea to compare your loan offers properly to make sure you select the best one.
Once you’ve accepted an offer, the funds will be disbursed to your account. How long it takes for the money to reflect in your account will depend on which lender you choose. With some, it can be as quick as 2-3 business days. With others, it can be a week or even longer.
4. Buy the Land and Repay Your Loan
Once you’ve received the money you can go ahead and buy the property. When all that is done, the only thing left to do is to repay your loan for an overseas property. Some lenders have autopay options you can set up over the internet. With autopay, your monthly repayment will automatically be deducted from your account each month. This ensures you don’t miss any payments.
5 Tips for Buying Land in Another Country
Now that we have shown you how to get a loan for an overseas property, here are the last few things to consider.
1. Make Two New Friends
Firstly, hire a local attorney to help you with the legal matters of your new investment. Then secondly, get an international real estate agent to help you with the actual purchasing of the property.
2. Buy the Product, Not the Promise
Make sure you don’t buy into someone’s promise. You need to separate the crafty sales tactics from the actual product you are buying. You need to buy something that will enhance your life and wealth. Doing proper research on the property you are considering will help you separate the product from the promise.
3. Manage Your Cash Flow Expectations
Do the research. Inspect the property. This will help you to expect any extra expenses or necessary investments that will be required. This may include things like plumbing or other maintenance expenses.
4. Get to Know the Neighbors
Before buying a property, it’s important to understand the community and area you are buying in to. These factors have a big impact on whether your property value will grow as expected. So if possible, meet and greet the neighbors next door and ask them a few questions. They might have some valuable insights.
5. Comply with Your Current Laws
Make sure you comply with all the current laws and regulations like FACTA disclosures. You don’t want any surprise visits from your current tax authorities. Adhere to the laws and tax regulations both in the U.S. and the country you are buying in.
Don’t miss the opportunity to invest in property overseas. You are now equipped to invest in overseas property and how to get a loan for an international property. So start turning your dreams into action. Buy property overseas today!