Financing your overseas property: here's what you need to know

Financing your overseas property: here’s what you need to know

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Purchasing a property overseas, whether as a holiday home or as an investment property, can be an excellent opportunity for you and your family. It is important to remember, however, that the process behind purchasing a property overseas can be quite complicated, especially if you need to acquire funding.

Firstly, when you decide to purchase a property overseas, it is crucial that you do your research and familiarise yourself with the laws of that country with regards to the purchase of property by non-residents. Certain countries have legislation which prevents non-residents from purchasing property, while other countries may allow you to purchase property, however only in certain areas. You need to familiarise yourself with the areas in which you can buy properties as these areas may have a low rental demand and you may end up losing money. You should also take into account what the minimum investment in that country is.

In the case of Mauritius, the island’s government recently changed its laws to enable foreign investors to buy properties on the island, however, the minimum investment is required of around MUR6 000 000. If, however, you purchase a property worth over USD 500 000, you can receive residency for you and your family.

When looking at finding the finances for and purchasing property abroad, it is important to get assistance from a lawyer, estate agent, or a broker that specialises in international purchases. Having someone who can fully explain the process and its intricacies, will ensure that you are not short handed or taken advantage of in the process.

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When it comes to finding a property abroad, an excellent option would be to consult Real Estate Agencies that are based in your country but that have an international presence. Hamilton’s now has a property portfolio in Mauritius, which means that people looking to buy property on the island can come directly to us, as opposed to having to find a reputable Estate Agency on the island itself.

Finding the money to purchase an overseas property can be difficult as many banks in other countries are unlikely to give mortgage loans to foreigners who do not already have assets or residency in the country. If you’re looking to purchase a property overseas there are a few options that you, as a South African, can look at:

  • Getting loans from South African banks for offshore properties is rare and most banks do not give their clients this option; however, ABSA has recently started to offer its clients loans for international properties.
  • Another option is to find a bank which has a presence internationally, as well as in your country as this may make it easier to acquire a property loan from them with which you can purchase an overseas property.
  • You can also look at selling, if you have one, your second property in South Africa and using that money as a down payment on an overseas property.

If the country’s banks do offer loans to foreign investors – as certain banks do in Mauritius – you will have to pay a much higher interest rate on your loan. You would also be required to pay a large deposit/down payment – in some cases over 40% of the total value of the property which you are looking to purchase, in order to secure the loan.

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It is also important to remember that purchasing a property abroad will also incur additional fees such as paying exchange rate charges, taxes on foreign owned land, registration duty, notary fees.

If you’re looking to buy your dream island home, contact Hamilton’s Mauritius branch on (230) 572 303 69, for more information.

Read our article on top sundowner spots to visit this summer here.

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Contact Hamilton’s Property Portfolio on 011 463 0155 or mail to [email protected]

Author: Lisa