Overseas Mortgage Explained

overseas mortgage

The percentage of homebuyers who actively seek out properties abroad is growing consistently. Not so surprisingly, America is one of the most preferred destinations to invest in homes among foreign buyers. With real estate sales to foreign investors totaling $78 billion during 2019, the US property market is witnessing a boom. The pandemic has also driven home prices down, making American real estate more accessible and attractive. Nevertheless, foreign real estate buyers often find it difficult to fund their dream property in the US.

If you are planning to purchase a home in America, we explain what an overseas mortgage is, and what your options are.

What is an overseas mortgage?

An overseas mortgage, also known as an international mortgage, is a loan that helps you purchase a property abroad. There are a number of ways to fund your property abroad including in the US. The easiest option is to contact a US lender to fund your home. The second option is to contact a bank locally where you hold citizenship. The third option is to remortgage your existing property abroad.

Let us take a look at the pros and cons of each of the options so that you can make a calculated and informed decision.

How to apply for a mortgage in the US

If you have a steady source of income, it is not that hard to get a loan in the US for your dream property. Once you furnish your salary slips or proof of pension, the lender makes a decision based on the value of the property you intend to purchase. To make your application strong and credible, make sure to have a good credit score,  a valid proof of identity and a regular source of income.

Advantages

  • American lenders offer lower interest rates on loans than overseas lending institutions.
  • There are a number of loan products for overseas investors, specifically to purchase a retirement or a second home in the US.

Disadvantages

  • If your local currency is not strong, loans offered by American lenders may prove to be expensive in the long term.
  • You may not receive protections offered by regulators in your home country

How to apply for a loan in your home country

You can contact a lending institution in your home country and apply for a loan. Most banks across the world offer loans to purchase properties abroad. American real estate comes with the added advantage of industry credibility and a high return on investment (ROI). These are factors that please banks abroad, and they are usually glad to lend. Depending on which country you are located in, this option might prove to be inexpensive.

Advantages:

  • Your local mortgage advisors may provide you with more personalized advice.
  • It might prove to be cheaper to apply for a loan in your own currency

Disadvantages:

  • They may lack specific information about the American real estate scene
  • They may not understand the long term benefits of owning a property in the US

Apply for a mortgage refinance

Many people choose to apply for a refinance loan on an existing property in their home countries. If you have already paid a considerable portion of your mortgage on a property, you can apply for refinancing. A bank in your country may agree to settle your first mortgage, and fund your property dream abroad without you having to apply for a second loan.

Advantages:

  • Refinance loans are cheaper than regular loans as their rates of interest and processing fees are lower
  • Processing time is less, especially if you have tenants living in your property

Disadvantages:

  • If you are going to use your existing property as collateral, you may risk the property if you can’t repay the loan.

Seek professional help to choose the best overseas mortgage option

Owning a home abroad is a dream nurtured by many people, but realized by only a few. Thankfully, living the ex-pat life in a dynamic society such as the US does not have to be difficult. To make the process of purchasing a property in the US easier, hire professional real estate agents and attorneys.

The US real estate industry is well regulated and organized, and a broker will be able to help you choose the best mortgage to fund your dream safely.

Need Help? We’re here for you!

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