2 BUYING YOUR PROPERTY
t’s easy to get excited about buying an overseas property and quite rightly too, owning a bolthole you can return to time and again and spend increasing periods of time in later life is an aspiration for many. But you also need to keep a clear head and face up to costs other than the buying price, from one-off purchase expenses through to ongoing maintenance costs. You should have researched the country you plan to buy in and have a good
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understanding of the fees involved in purchasing a property – land registry, legal fees, etc – and your agent should be able to give you the detail on this. If you require funding, mortgage availability and interest rates will play a key part in your monthly outgoings and you should be clear on what you can and cannot afford. Exchange rate fl uctuation is an important factor and you may want to tie
yourself into a pre-agreed rate with a specialist currency provider for monthly overseas payments so you have no nasty surprises if the rate moves against you (equally though, you won’t usually benefi t if the rate improves – for more information on currency see page 39). Many people choose to offset their monthly costs through rentals and if this
is part of your plan, you need to have researched the area to see what similar properties charge per week in the high and low seasons and understand how many weeks occupancy you can expect (for more information on renting out your property see pages 28-29).
The example below outlines typical one-off purchase costs, this happens to be in Spain and other countries will vary, plus the monthly repayments based on borrowing 70% of the purchase price. Obviously the mortgage repayments revolve around the amount borrowed but some of the one-off costs – legal fees for example – will also be less for a lower-priced property.
PURCHASE PRICE: €379,500 (£307,502)
MORTGAGE OPTION Capital repayment mortgage of 70 per cent LTV (€265,650) with an interest rate of 3.47 per cent and a 25-year term.
ONE-OFF PURCHASE COSTS Deposit (30 per cent of €379,500)
€113,850 (£92, 237)
Closing costs (notary, land registry, purchase tax, lawyer) €30,360 (£24,599) TOTAL ONE-OFF PURCHASE COSTS
£116,836
ONGOING COSTS (NOT TAKING INTO ACCOUNT ANY RENTAL INCOME) Monthly mortgage repayment (over 25 years) Annual council tax
Utilities per year (has solar system, self-suffi cient water and electrics) TOTAL ANNUAL OUTGOINGS TOTAL MONTHLY OUTGOINGs
€1,326 (£1,074) €128 (£103) zero
£12,991 £1,082
RENTAL INCOME: This property should rent for €500-€1,000 per week (depending on time of year) and 40 weeks might be possible through good marketing. These fi gures are a guideline only.
THE REAL DEAL: Budget to have £117,000 in the bank to take ownership of this property with a 70 per cent LTV mortgage. This would make the property’s annual running costs around £13,000 If you let the property, you’d need to factor in management costs and potential income tax on rentals.
AIPP CONSUMER GUIDE 27
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