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While finding the right home abroad at the right price may seem relatively easy, what is the best way to pay for it?
Unless you have plenty of money stashed away in banks or savings plans, you essentially have two methods of financing. Besides selling up and using the balance to buy abroad, you can borrow in your own country, perhaps through remortgaging your primary residence. If that is not possible, then in most countries, particularly in the developed world, obtaining a mortgage on the property you are buying is possible for foreign nationals.
The second option, though potentially more troublesome initially (given that foreigners often find they can obtain less than a local, say around 60 percent of the appraisal value of the property) may be a smarter solution if you have to worry about the effects of fluctuating exchange rates.
Another factor to take into account when deciding where to borrow is the effect of interest rates, which can vary considerable from one country to the next, and how inflation-induced wage rises in the country where you are receiving your income could offset the higher interest on a loan held elsewhere.
It is also important for buyers to bare in mind that the overall costs associated with buying a home abroad, in the form of legal and registry fees and taxes among other payments, can be considerable higher than what they may be accustomed to in their home country. It is not uncommon, for example, for such fees to amount to 10 percent of the price of the property, and in some instances can run to as much as 20 percent.
Even after the purchase, there are recurring costs to consider, so learning how much to expect to pay in utility fees, maintenance charges and local taxes should not be overlooked. Sound legal advice is often essential to avoid the potential financial pitfalls.
And remember a small amount paid in the beginning for guidance and assistance can, in the long run, pay itself back ten-fold in cost and time savings.
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