UK estate agents are more pessimistic about the UK economy than at any time over the past 30 years. But there is a silver lining for those with an interest in overseas mortgages in the Euro-zone.

Since the Northern Rock debacle became public in late 2007, the Sterling exchange rate has gradually weakened against the Euro, such that record lows are now being hit.

Alistair Riddle, Credit Manager for Piraeus Bank UK explains. “This means that if you purchased your property more than seven months ago, any equity that you may have in the property will be exaggeratedly bigger in Sterling terms. This could be of use if you face UK negative equity, are looking to jump up the property ladder if UK house prices slip or if you need a deposit in the UK to cover the shrinkage in loan-to-values that banks are generally currently offering.

“It should be noted that just because your overseas property is now worth more in Sterling terms, to release funds you either have to have had equity in the property in the first place or are able to sell the property (naturally bearing in mind any applicable taxes for doing so).

“If you are looking to take some equity out, it is critical to remember that as the debt level in your investment rises, so does the repayments on the debt and this cost must be factored into your calculations. If you are renting out your property and are receiving constant rental streams, preferably in the currency that you have borrowed in, then this is ideal as there is no exchange rate risk.”

What if you wanted to purchase an overseas property and are now concerned about the worsening strength of Sterling? Piraeus Bank UK Head of Retail Banking, Irini Tzortzoglou, suggests: “As with all investments, what and where you buy is very important – so long as you do your research fully and understand and accept the risks of purchasing property in a different currency, then there remain affordable properties to be purchased abroad.

“If you believe that the UK housing market is set for a tough time over the coming months or the medium term, perhaps the opportunity to purchase bricks and mortar in a different country will prove attractive. Certainly, we have not seen a slow down in the volume of applications for mortgages to purchase properties in the overseas markets that we provide mortgages for purchasing properties in.”

In summary, Piraeus Bank UK offers the following tips to making the most out of your overseas property during the credit squeeze:

• A Euro mortgage on overseas property can be utilised whilst the Sterling exchange rate is in a weakened position.

• UK buyers can release equity from their overseas properties to alleviate negative equity on a UK property and generate a larger deposit to purchase UK property using a mortgage.

• Renting the overseas property should be explored as a means to reduce or fully cover mortgage repayments.

First time buyers can consider purchasing in countries where property price increases are expected to be higher than in the UK in the next two-three years so as to get on the property ladder.

© Fly2Let.net Ltd l Terms of use l Contact l Free Subscription l Webmaster
Brazil l Bulgaria l Canada l Cape Verde l Croatia l Cyprus l Dubai l Egypt l France l Germany l Hungary l India l Italy l Morocco l Portugal l Romania l Slovakia
South Africa l Spain l Thailand l Turkey l UK l USA l Other Countries
Investment Property l Off Plan Developments l Ski Property l City Apartments l Golf Property l Beach Front Property l Land Investment
Cheap Flights l Car Hire l Property Finance l Property Insurance l Travel Insurance l Property Maintenance l Overseas Removals l Currency Exchange l Exhibitions & Seminars