3 Reasons Getting Mortgages Overseas May Be Difficult

Obtaining mortgage overseas is usually a lot more difficult than finding a property that you would like to buy overseas. Other countries do not have the same rules and regulations that we have. As a result of this, it becomes more difficult for Americans to obtain a mortgage in those countries. With that being said, there are mortgages out there under the right circumstances. You will just have to overcome a few barriers and look in the right places. Here are a few reasons that getting a mortgage overseas might be more difficult than you anticipated.

1. Odd Rules

When you take out a mortgage, the bank wants to be able to have some sort of stake in the property. They want to know that if you default on the property, they can come along and foreclose on the property. This helps to protect their investment and makes it more practical for them. When you buy a house in certain countries, their rules and legislation might make it very difficult for a bank to foreclose on the property. If that bank does not regularly do business in the other country, they may have no idea how things work. This means that they could be investing in a property that they have no way to get back if you default. This is an extremely risky proposition for lenders and most of them will avoid it as a result. 

2. Different Mortgages

Something else that many Americans do not realize is that foreign mortgages are usually much shorter. You can not go overseas and get a 30-year fixed rate mortgage. Most of the time, you will only be able to get a variable rate mortgage. This increases your risk and makes things more unpredictable for you. In addition to the variable rate, the term will also usually be much shorter. For example, it is not uncommon for you to find a 5-year mortgage to be the longest term you can find depending on the country. When you are used to a 30-year mortgage, a 5-year mortgage may be completely out of reach. The payments will be substantially higher and put most people out of the market for a house. Be prepared for completely different terms than you are used to with your normal mortgages.

3. Find the Right Company

When you are looking for a mortgage overseas, you will quickly find out that there are only certain companies that invest overseas. For example, if you want to buy a house in Central America, you will only be able to find a few banks in the U.S. that are willing to back you. For each region in the world, you will usually have a few options to choose from. Beyond that, you will not be able to obtain a mortgage. If you are working with a real estate agent overseas, it may be a good idea to ask them how to get financing. They may be able to walk you through the local market to find a mortgage. 

blog comments powered by Disqus