Mortgage on Holiday home

[jonwm]

Hi all
Have no experience in any way of buying abroad, looking at a 60 to 80k place in Spain, have about 25k to put down but want to finance the remainder, other than google im not sure of where to start, has anyone got any experience or advice on where to start
Thanks

[Welshbeef]

First question as someone who owns overseas properties

How often will you actually use it?
Will you enjoy going back to he same place year in year out?
How will you maintain the gardens?
What about security when it's vacant
All of the local taxes (rates services etc)
The mortgage would have to be in € what happens if the £ devalues v the € how will you find the extra £ to pay for the additional costs?

Really think long and hard - if I'd have my time again my choice would have been very different.

[Tony Angelino]

Welshbeef said:

First question as someone who owns overseas properties

How often will you actually use it?
Will you enjoy going back to he same place year in year out?
How will you maintain the gardens?
What about security when it's vacant
All of the local taxes (rates services etc)
The mortgage would have to be in € what happens if the £ devalues v the € how will you find the extra £ to pay for the additional costs?

Really think long and hard - if I'd have my time again my choice would have been very different.

Absolutely this last bit, agree 100%. I sit with the electric being cut off in our Spanish apartment (and has been for the last 12 months or so) with absolutely no sign of a resolution rendering it practically useless.

Seriously considering seeing how Brexit will effect us defaulting on the mortgage and cutting our losses.

[Doofus]

When we bought in France, there were one or two UK banks who would lend on French property, but I already had an account with BNP Paribas (as was). They had an English-speaking mortgage department, and were very helpful. Gave us a great rate too, and were a bit pissed off when I cleared the mortgage a year later

Google English-speaking Spanish banks/lenders, and see if owt comes up.

[jonwm]

Thanks for the input and experiences, idea of purchases is to have a getaway, have 2 kids (both under 5) and enjoy Spain when we have been, hope to rent to cover some cost to family and friends but not looking at an investment as such.
Will do a bit more research on some lenders and rates.

[Welshbeef]

jonwm said:

Thanks for the input and experiences, idea of purchases is to have a getaway, have 2 kids (both under 5) and enjoy Spain when we have been, hope to rent to cover some cost to family and friends but not looking at an investment as such.
Will do a bit more research on some lenders and rates.

£80k + interest + service costs buys a huge number of family holidays.

[13m]

Welshbeef said:

jonwm said:

Thanks for the input and experiences, idea of purchases is to have a getaway, have 2 kids (both under 5) and enjoy Spain when we have been, hope to rent to cover some cost to family and friends but not looking at an investment as such.
Will do a bit more research on some lenders and rates.

£80k + interest + service costs buys a huge number of family holidays.

This.

I used to want a place in Italy. But when I thought about it properly I realised that we could holiday in luxury several times a year for less.

[DonkeyApple]

jonwm said:

Thanks for the input and experiences, idea of purchases is to have a getaway, have 2 kids (both under 5) and enjoy Spain when we have been, hope to rent to cover some cost to family and friends but not looking at an investment as such.
Will do a bit more research on some lenders and rates.

I wouldn't be too focussed on the borrowing aspect as there is a whole lending industry set up to cater for domestic Brits looking to finance European property purchases.

The key is to really understand the running costs and usage etc.

With regards to usage you need to consider things like the local facilities/amenities as an area that is perfect for young children may not be ideal for older children etc.

How many different airlines service the area. Shouldn't be an issue for the Costas but there are certainly holiday home owners who have been caught out by budget airlines changing where they fly from in the U.K. or reductions in the number of flights and the subsequent cost increase.

For running costs you also have the cost of furnishing, maintenance for dormant homes tends to be higher, cost of issues such as leaks while you are not present, insurance and the fact that it is not exactly uncommon to have holiday homes stripped by locals. Damage done by third party users, cost of repairing that damage from the UK. Cost of cleaning it after it's been rented out. Currency risk, cost of continual currency exchange. Taxation risk, especially post Brexit. Hassle of arriving with two young children and finding you have to spend the first chunk of your holiday sorting the property out and queuing in public offices to get paperwork sorted. And finally, what actual capital uplift over time is expected. What you will find there is that is that if you guesstimate 5% per annum then it's easy to suddenly see that you need a property above a certain value for the potential capital uplift to outweigh the annual running costs.

The general mistake that the majority of people make is that they firstly think that they will make money over time through the ownership. They won't. And secondly that it will be more relaxing and enjoyable than simply renting someone else's supposed 'investment'. It won't.

In short, once you recognise that you will lose money over time, it will cost more to use than a normal holiday and as the bloke you will be spending the bulk of your holiday doing maintenance and paperwork then, if you still want to go ahead, go for it.

I've run second homes in Italy and the Cotswolds for years. Before the children they were both great as we simply alternated which one we used each weekend and left on the Thursday or Friday and returned on the Monday. With children we simply stopped using them as weekend retreats, especially Italy. The flights with kids were a pain in the proverbial and weekend travel became Saturday to Sunday so not worth it and as we used it less it became more of a ballache to maintain. You then look at renting it to sweat the asset but the periods which are in demand and pay the money happen to coincide with when you would actually use it. We thought about keeping it for old age so just renting it out full time but being in an idillic, country location the local population didn't have the money to pay the level of rent to make it worth the hassle and this was a property with no mortgage. It was very easy to see that it made far more sense to sell it to another Englishman and then rent a place when we wanted to.

The place in the Cotswolds was easier as it's only an hour and a half's drive but as we we no longer there every other weekend it meant I was doing more and more work when I was there. About two years ago I ran the maths of how much it was costing me to run versus the potential for capital gain and factored in how much of my spare time was being spent on admin and maintenance and realised that it was cheaper to sell the place and rent the holiday cottage next door twice a month instead.

I never went into either to make money they were both fun purchases to enhance my quality of life but when they ceased to deliver on their original intent they were disposed of.

One thing I know for sure is that with Brexit looming I wouldn't be looking to purchase in Europe until everything has been clarified, especially Spain where the outcome of negative will have the most devastating impact on property values in the kind of areas you are possibly considering.

[MagicalTrevor]

We've considered something similar for the future. We love Spain for holidays and the properties are relatively cheap... no brainer right?

I reckon, to get our moneys worth then we'd need to go there for every holiday and allow family use it for free/nominal amount. So on reflection we decided that we'd get bored going back to the same place year on year so despite being more expensive (buying a depreciating asset vs appreciating asset) it's probably better to buy a decent, proper motorhome for £30k+ instead and using that to visit different places.

[Eric Mc]

And don't forget the taxation implications - both UK and Spanish - of owning a property.

[Welshbeef]

Investing in Ski resorts might make sense - it's a hugely expensive holiday that you can then use peak season saving you a fair amount BUT your talking boat loads of £ for decent resorts. Plus you then end up going to the same place year in year out instead of seeing the world.

YOLO - and yes I've done it and have properties overseas.

[DonkeyApple]

It's always been my view that the beaches at ski resorts are st.

[Welshbeef]

DonkeyApple said:

It's always been my view that the beaches at ski resorts are st.

Not really.

There are some with summer glaciers and beach in Italy/France easily in the same day.