How to Finance an Overseas Property - HSBC International (2022)

Buying a property abroad is an exciting adventure. But one of the biggest hurdles you may face is coming up with the money for your investment.

However, you do have a few options when it comes to financing overseas real estate, whether you want to buy a holiday home, an investment property while your child studies abroad, or a place to retire to.

You can:

  • arrange an overseas mortgage with your local bank

  • apply for a mortgage from an overseas lender

  • release equity from your home, if you already own property

  • pay in cash to buy the property outright

An overseas mortgage is any mortgage you take out on a property that's not in your country of residence. It can be from a local bank, or from an overseas lender in the country you want to buy in. Your approach will depend on your personal and financial situation, so it's important to do your research. Weigh the pros and cons of each option to help you decide.

You might be surprised about some of the perks that can come with owning overseas property.

How to Finance an Overseas Property - HSBC International (1)

Arrange an overseas mortgage from your local bank

Some banks and building societies, including HSBC, offer international banking services and can help you arrange an overseas mortgage. You'll need to check that they support your chosen country or territory.

By using a lender in your home country, you:

  • can arrange a mortgage in your own language

  • are less likely to run into translation problems

  • will save money on translation service fees

  • can expect the mortgage process to be quicker, as a local lender will have access to your credit history

  • might find that your credit score can increase your chances of getting a mortgage

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Keep in mind that buying a property overseas can be a very different process than what you're used to. You also might not have the same legal protection, depending on the location.

Other things to consider are foreign ownership laws; tax rules; foreign exchange fluctuations; planning permission; your exit plan, should you ever decide to sell; and insurance. With all the details you may not be familiar with, it's important to choose a lending bank that understands the local laws and has international experience in the country you want to buy in.

If you do use a local lawyer, make sure they are qualified to practice in your current country and overseas, preferably even specialising in international real estate transactions.

How to Finance an Overseas Property - HSBC International (2)

Apply for a mortgage from an overseas lender

Another option is to arrange a mortgage from an overseas lender through a foreign bank or a specialist broker.

An overseas lender may:

  • have greater knowledge of the local laws and mortgage market

  • provide you with better access to more mortgage deals and, therefore, cheaper interest rates

However, it can be very difficult to get a mortgage overseas, especially if you're a foreigner. And if you do manage to get one, the interest rates could be much higher than if you were a local. If you take out a mortgage with an overseas lender, your payments are likely to be in a foreign currency, which might help if you want to manage foreign exchange fluctuations.

Your money will go further if your home currency is strong relative to the local currency overseas. But, if there are fluctuations and you see your currency fall, your payments could become more expensive if you're converting your devalued currency into the overseas currency to cover them.

If you use an overseas lender, it's recommended that you use your own, independent lawyer and translator to protect you from fraud.

How to Finance an Overseas Property - HSBC International (3)

Release equity from your own home to buy a property overseas

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If you can afford to, and if you have enough equity in it, you may consider refinancing your own home and using that money to pay for a property abroad.

Equity is the value of how much of your property you own. In other words, it's how much money you'd get after selling your home and paying off your mortgage. For example, if your mortgage balance is USD100,000 and your home is worth USD400,000, that means you have USD300,000 equity in the property.

You can increase your home equity by overpaying your mortgage payments, which puts extra money into the property, or if the value of the property goes up, either through home improvements or favourable market conditions. Making additional payments will also help you pay off your mortgage earlier and reduce the amount of interest payable. You may, however, be charged for early repayment; this will depend on the type of mortgage you have.

Releasing equity is a way to free up some of that value as cash to help you fund an overseas property. Think carefully about doing this though. Many such mortgages charge compound interest that will add up if you don't pay it as you go along. You'll also receive less than what your house is worth on the market in exchange for the cash.

When you borrow more money against your home, both the size of your mortgage and your monthly repayments will increase. You need to make sure you can afford the repayments to avoid your home being repossessed. House prices can go down as well as up. If the value of your home falls, you could go into negative equity. This is where you've borrowed more money than your home is worth.

In some countries, such as Australia and Canada, banks will not accept foreign property as security for a home loan. They'll also limit your borrowing to a certain percentage of the property's value (usually around 80%). This is called the Loan to Value Ratio (LVR).

How to Finance an Overseas Property - HSBC International (4)

Use your savings to buy a property overseas

If you have the funds already, buying a property abroad in cash can overcome the challenges of borrowing money. It's important that you can afford the property and have enough savings to cover expenses, such as:

  • international bank transfer fees

  • tax and legal fees

  • translator fees

  • furniture, shipping and insurance costs

  • ongoing costs to maintain the property

By paying cash, you won't have to worry about paying back any interest on a loan. It might even give you an edge and bargaining power over other potential buyers if owners are keen to sell quickly. And if you have bank accounts in both countries, you may not incur any transfer fees at all: with HSBC Global Transfers you can transfer up to USD200,000 per day (or the currency equivalent) for free, to several countries and regions, including Australia, Canada, Indonesia, Mexico, the US and the UK.

If you decide to pay cash for your investment, you'll be tying up a big chunk of money in an asset and reducing your liquidity. Be wary of paying cash when you're buying off-plan in case the developer runs out of funds and you're left with a half-built property.

Before handing over any money, it's important to get independent legal and financial advice.

How to Finance an Overseas Property - HSBC International (5)

How much deposit do you need for a property abroad?

Lenders usually require a deposit, or down payment, of at least 20%. You may need a higher deposit for an overseas mortgage.

For example, a deposit for a Spanish property can be around 30% to 40% of the property price for non-residents. So if an apartment is on sale for EUR200,000, you may need up to EUR80,000 as a deposit. In Canada, lenders will usually ask newcomers for a down payment of 35% of the property's value; this will usually go down once the buyer builds up credit in the country.

If you're an HSBC customer with credit in one country, it's easier for us to share your credit details with your destination market when you're applying for an overseas mortgage.

In some countries, deposits may be non-refundable for non-residents, so it's important to be happy with the purchase and have all the relevant checks in place.

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Things to know about real estate practices around the world

As real estate practices vary around the world, it's important that you understand the local process to avoid the risk of violating any laws or making costly errors. Some countries have government-mandated restrictions in place when it comes to foreigners owning property, with the buyer's country of residence, citizenship and financial situation also taken into consideration.

Australia

With some exceptions, non-residents in Australia need to have foreign investment approval to purchase residential property unless they're buying a new dwelling or vacant lot, which must then be developed within 4 years of purchase.1

Canada

Buying real estate in Canada is not related to citizenship or residency. In fact, there are no restrictions on how much property or the type of property you can purchase as a foreign buyer. You may, however, need to pay additional property tax of around 15-20% in some provinces, on top of the standard property taxes.

China

Foreigners can purchase commercial real estate if they're planning to occupy it themselves.

France

If the buyer can secure financing there are no real estate restrictions for foreigners. Should the purchaser pass away, the property is not subject to French laws but to the purchaser's country of residence.

New Zealand

The government banned the sale of property to non-residents in 2018, but Australian and Singaporeans are exempt from these restrictions because of free-trade deals among the 3 markets.2

Portugal, Greece and Spain

Foreign investors buying a home and living there for at least 5 years will be granted "property-based citizenship".

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Singapore

Permanent residents who have lived in the city-state for no less than 5 years don't need approval to purchase apartments, condos or short-term leasehold estates.

US

Non-residents with property that is not tied to a business or trade will usually be taxed at around 30%.

Consider the costs and risks

Consider the costs, such as tax and insurance, as well as the risks involved when buying overseas. In the US and the UK, you'd receive the title to the property; ownership may not be as clear in other countries.

It's recommended that you go through a qualified real estate professional and get independent legal and financial advice at every stage of the buying process.

Ready to apply for an overseas mortgage?

If your property of interest is located in Australia, Canada, mainland China, France, Hong Kong SAR, India, Malaysia, New Zealand, Singapore, UAE or the US, you may leave your details on our quick form. Our experienced international team will get in touch with you on your preferred time and date to answer your questions about financing property overseas.

If your property of interest is in the UK, then please visit our UK website.

Arrange a call back Arrange a call back to talk to us about an overseas mortgage

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FAQs

Does HSBC do international loans? ›

As a global mortgage specialist, HSBC offers home loans and international bank accounts around the world so you can finance your overseas properties and have your banking needs met, all under one roof.

Which UK banks do mortgages for overseas properties? ›

Many UK banks with an international presence, such as HSBC, and Natwest, will only offer overseas mortgages to their own banking customers.

Can I borrow money in the UK to buy property overseas? ›

You can't use a UK mortgage product to buy a home abroad. You must instead get an 'overseas mortgage' – normally from a lender in the country where your property is located.

Will Australian banks lend on overseas property? ›

Again, Australian banks generally do not provide funds for offshore purchases as they're seen as high risk. Although you can receive a loan from some US banks, the process can be much easier for a cash-only buyer.

How do you finance a foreign property purchase? ›

7 options for buying a home overseas
  1. Cash.
  2. Retirement savings.
  3. Home equity loan.
  4. HELOC.
  5. Personal loan.
  6. Developer and seller financing.
  7. Local mortgage.
28 Sept 2021

How do I fund my property abroad? ›

How to finance an overseas property
  1. arrange an overseas mortgage with your local bank.
  2. apply for a mortgage from an overseas lender.
  3. release equity from your home, if you already own property.
  4. pay in cash to buy the property outright.

How can I buy a house abroad from UK? ›

You have a number of options when it comes to raising the money for buying abroad.
  1. Cash. ...
  2. Remortgage a UK property. ...
  3. Get a mortgage from a UK bank. ...
  4. Use an overseas mortgage provider.
3 Nov 2022

How much deposit do I need for an expat mortgage UK? ›

The deposit you will need for an expat mortgage is usually 25% of the property's value, but this can vary depending on the location and the property type. A select few lenders may require less under the right circumstances.

What is an international mortgage? ›

An international mortgage is a loan secured against a property in a country other than where you live.

Can I use help to buy if I own a property abroad? ›

The general eligibility criteria for Help to Buy is as follows: You must be at least 18 years old. You must be a first time buyer, meaning that you have never owned another property either in the UK or abroad.

How much can the UK government lend to an overseas buyer? ›

There is no fixed lower limit, although for loans below £5 million (or the foreign currency equivalent), we may offer alternative export finance options. In most cases, direct loans will not exceed £200 million.

Is it worth buying a property abroad? ›

One of the numerous perks of buying an investment property abroad is that there is less volatility than you see in other financial markets. In contrast to the stock market where buying and selling shares happens in a second, property investment has proved relatively stable.

Can you take mortgage interest on foreign property? ›

Yes, if it meets all the usual tests of a domestic home. The loan must be an acquisition loan (one to purchase the home), and it must be secured by the home. The two home (main home and second home) limit applies in addition to the $1 million total debt limit.

Does Australian will cover overseas assets? ›

Does your Australian will cover them? Do you need a separate will in each country? A will that you make in New South Wales will cover assets that you own in other parts of Australia but you can't assume that any overseas assets you have will be protected by your Australian will.

How do I buy a house overseas in Australia? ›

Typically you need to be a permanent resident or citizen to buy property in Australia and many of the available home loans also require you to be Aussie. But don't fret, foreigners can still buy: the property needs to be categorised as an investment and you need to get government approval.

How does a foreign currency mortgage work? ›

A foreign currency mortgage is one that is serviced or repaid in a different currency from the borrower's income. This type of income can include any assets that is being used to repay the mortgage, which are received in a different currency to the loan currency.

Can I buy a house with a foreign bank account? ›

Q: Do I need to have an American bank account to purchase American real estate? A: If you plan to finance your purchase with a foreign national loan from a bank, then yes. Some private lenders don't require borrowers to have an American bank account, though their flexibility is offset by higher rates.

Where Can foreigners buy property easily? ›

  • Paris, France. The charm of Paris is undeniable. ...
  • Valletta, Malta. Malta is a First World jewel of three islands in the Mediterranean that's a quick plane ride away from most of Europe. ...
  • Limassol, Cyprus. ...
  • Davos, Switzerland. ...
  • Milan, Italy. ...
  • Lagos, Portugal. ...
  • Valencia, Spain. ...
  • Krakow, Poland.
24 Mar 2022

How do you manage overseas property? ›

Finding a management company
  1. Marketing and showing potential renters around the property.
  2. Carrying out the screening and legal vetting process.
  3. Check-in/out of the property including an inventory.
  4. Collecting the initial security deposit and the monthly rent.
  5. Ensuring bills are paid on time.
11 Oct 2019

Can you get a mortgage from a foreign bank? ›

This may be possible, but there are often restrictions on foreign buyers, particularly if you're not resident. Individual banks and mortgage providers have the final say on who they're willing to offer a loan to.

Do I need to pay stamp duty if I own a property abroad? ›

What if I own property abroad? You are liable for the 3% additional stamp duty even if the only other property you own is abroad.

Is it hard to buy property abroad? ›

One of the most basic issues in buying property abroad is the language barrier. Buyers who aren't fluent will have a difficult time signing contracts or independently working through legal documents. Some countries, such as Mexico, have a large population that speaks English.

Can HMRC check property abroad? ›

In 2017, HMRC started to receive new information about accounts, trusts and investments based outside the UK from more than 100 jurisdictions around the world. This means HMRC will be able to check you are paying the right amount of tax more easily.

Do I have to pay UK tax on foreign property income? ›

Whether you need to pay depends on if you're classed as 'resident' in the UK for tax. If you're not UK resident, you will not have to pay UK tax on your foreign income. If you're UK resident, you'll normally pay tax on your foreign income.

Which bank is best for UK expats? ›

Length of stay: Many of the top banks in UK offer international current accounts that you can open and operate from overseas.
...
*This list is not placed in any particular ranking order.
  • Barclays. ...
  • HSBC Expat Premier Account. ...
  • Lloyds International Current Account. ...
  • Citibank Citigold Expat. ...
  • Standard Bank Optimum Account.

What is the maximum home finance value for an expat? ›

Home loans are available to employed or self-employed expat residents earning at least AED 15,000 a month at a value of up to AED 10 million.

How much deposit do I need for a 250k house UK? ›

To work out how much you need to save for a deposit, it may be a good idea to decide how much you can afford to borrow. For a £250,000 property, you'd need to put down the following as a deposit: 5% deposit: £12,500. 10% deposit: £25,000.

Can I buy a house overseas? ›

The policies for foreign investment into real estate vary from country to country. Most countries allow overseas investors to purchase property, but often this will not grant you the right to live, work or stay in that country.

Who are international lenders? ›

The major international lenders are the World Bank and its affiliates—especially the International Monetary Fund (IMF) and International Finance Corporation (IFC). There are also regional lending institutions such as African Development Bank (AfDB), Asian Development Bank (ADB), and European Development Bank (EDB).

What is the meaning of international property? ›

The term international real estate describes a relatively new phenomenon, beginning in the 1980s and keeping pace with globalization. The term encompasses real property development, sales and leasing transactions across national borders.

Can Help to Buy be rejected? ›

A Help to Buy purchase is normally supported by a mortgage so if a lender declines this aspect of the transaction everything grinds to a halt. The good news is not all mortgage lenders apply the same strict rules and your Help to Buy purchase may still be possible.

Is there a maximum income for Help to Buy? ›

The scheme is open to both first time buyers and existing home owners**. There is no maximum household income.

How does buying a house in another country work? ›

Individual countries have the right to place restrictions on non-citizens who want to own properties. Even if the country you're interested in allows foreigners to buy homes, you may be required to obtain special residence permits or register with a government agency before you can complete a home purchase.

What is overseas borrowing limit? ›

RBI has increased the External Commercial Borrowing (ECB) limit under the automatic route from USD 750 million or its equivalent per financial year to USD 1.5 billion and eased the norms for FPI investments in the debt market.

How much money can you bring into the UK undeclared? ›

You must declare cash of £10,000 or more to UK customs if you're carrying it between Great Britain (England, Scotland and Wales) and a country outside the UK. If you're travelling as a family or group with more than £10,000 in total (even if individuals are carrying less than that) you still need to make a declaration.

Who will get the 650 payment UK? ›

You may get a payment of £650 paid in 2 lump sums of £326 and £324 if you get payments of any of the following: Universal Credit. income-based Jobseeker's Allowance ( JSA ) income-related Employment and Support Allowance ( ESA )

Which European country is the easiest to buy property? ›

Portugal is the easiest European country to buy property in. Those who wish to purchase property in Europe can purchase commercial property under Portugal's Golden Visa scheme.

Which country is best for investment property? ›

Most Stable and Secure Countries for Real Estate Investment
RankingCountry
1.US
2.Germany
3.Canada
4.UK
1 more row

How do foreign properties avoid taxes? ›

Ways to Avoid Paying Capital Gains on Foreign Property
  1. Capital Gains Exclusion. If you sell a foreign property, you may be able to deduct some or all of the capital gains. ...
  2. Avoid Short-term Capital Gains. ...
  3. 1031 Exchange. ...
  4. Mortgage Interest Deduction.
19 Apr 2022

Do I need to declare a foreign property? ›

Yes, you must report foreign properties on your U.S. tax return just like you would report any owned U.S. property. To do that, you first need to know what type of ownership you have because it affects what tax forms you must file.

Do you have to pay tax on foreign property? ›

When you sell property or real estate in the U.S. you need to report it and you may end up owing a capital gains tax. The same is true if sell overseas property. The U.S. is one of only a few countries that taxes you on worldwide income — and gains made from foreign property sales are considered foreign income.

Do Australians have to declare inheritance of overseas property? ›

Put simply, you don't have to. According to tax accountants, H&R block, an overseas inheritance is not taxable unless you are advised by the executor that a part of it is. Bear in mind, however, there are some specific financial transactions that may still be taxed, despite Australia not having inheritance tax laws.

Do I need to declare inheritance from overseas in Australia? ›

Inheriting money and assets

There are no inheritance or estate taxes in Australia. However, you may have tax obligations for the assets you inherit: capital gains tax may apply if you dispose of an asset inherited from a deceased estate.

Who inherits if no will Australia? ›

Current spouse, children from the relationship, and children of the deceased from a previous relations​​hip. If the deceased person also has children from previous relationships, the current spouse is entitled to: all of the personal effects. a statutory legacy^ ($482,000 in 2020*)

How do you pay for a house internationally? ›

Even without a domestic mortgage, you have several options for buying overseas real estate.
  1. Cash.
  2. Retirement savings.
  3. Home equity loan.
  4. HELOC.
  5. Personal loan.
  6. Developer and seller financing.
  7. Local mortgage.
28 Sept 2021

How do I buy a house in Australia from UK? ›

Non-residents need Foreign Investment Review Board (FIRB) approval to buy a property unless you're married to an Australian or hold a permanent resident visa or special category visa. The majority of applications are successful and normally take within 30 days. The fee is AU$5800 for a property under AU$1m.

Who needs FIRB approval? ›

Foreign persons generally require foreign investment approval before acquiring interests in securities or assets, or taking other actions in relation to corporations, unit trusts or businesses that have a connection to Australia.

Can I apply for international loan? ›

Most international students must have a US co-signer in order to apply for a student loan. Although there are no co-signer loan programs at select schools in the USA and Canada, almost all international students will require a co-signer. A co-signer is legally obligated to repay the loan if the borrower fails to pay.

Can I borrow a loan from another country? ›

You can obtain a loan from a foreign country by finding an off-shore bank or finance company. Applying for a loan is much easier now that we have the internet. You can seek out institutions that offer international loans and pay in your own currency or the local currency.

Where can I get international loans? ›

Best International Student Loans of November 2022
  • Best for Undergraduate Students Without a Cosigner: MPOWER Financing.
  • Best for Graduate Students Without a Cosigner: Prodigy Finance.
  • Best for Graduate Students With a Cosigner: Citizens One.
  • Best Interest Rates: Ascent Student Loans.
  • Best for DACA Recipients: Discover.

Can I get a loan from a bank overseas? ›

Offshore financing can be a fantastic option that offers borrowers favorable terms, a variety of loan options and a much easier application and loan qualification process. Let this guide you through the process of obtaining a loan through an offshore bank.

Which country has highest international loan? ›

List
Country/RegionExternal debt US dollarsPer capita US dollars
United States24 trillion72,217
United Kingdom8.73 trillion129,203
France7.04 trillion107,245
Germany6.46 trillion77,607
91 more rows

What are international loans? ›

Foreign Currency Loans

Government and banks sometimes borrow money from international lending agencies and institutions. The major international lenders are the World Bank and its affiliates—especially the International Monetary Fund (IMF) and International Finance Corporation (IFC).

How do foreign loans work? ›

A foreign currency loan means that you borrow money in a foreign currency, for example Swiss francs, and you have to repay the loan in this currency as well. In practice, this is what happens: The bank obtains the loan sum in francs from a Swiss bank, converts it into euros and pays it out to the borrower.

How much can I borrow abroad without collateral? ›

Public banks like SBI, Bank of Baroda, etc offer applicants with a loan of upto 7.5 Lakhs without collateral. Private banks like Axis Bank, ICICI Bank, HDFC, etc offer students a loan amount upto 40 lakhs without collateral.

Can a lender ask what country you are from? ›

What is fair lending? Fair lending prohibits lenders from considering your race, color, national origin, religion, sex, familial status, or disability when applying for residential mortgage loans.

Can I get a home loan from an overseas bank? ›

US citizens may be able to access international mortgages through the global banking service provided by their regular bank. Several banks in the US offer international mortgages although the service may be limited by country or customer needs. Here are a few options to consider.

Are World Bank loans interest free? ›

In addition to direct contributions and loans from developed countries, these countries receive grants, interest-free loans, and technical assistance from the World Bank to enable them to provide basic services. In the case of the loans, countries have 35-40 years to repay, with a 10-year grace period.

Where is the easiest way to get a loan? ›

Bank. Banks are often the first option for many as they think about getting a loan. This can be good for borrowers with higher credit scores, since traditional banks may have stricter qualification requirements on minimum credit scores or income. They may also offer lower interest rates than bad-credit loan lenders.

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