The Latest Spanish Property News from Kyero.com

More people than ever, even expats, are opting to beat the winter blues with a second property overseas where it is warm all year round, but what is the best way to pay for it?

Britain’s biggest building society, Nationwide, reports an 85pc increase over the past decade in the number of Brits who own foreign property.

Price is a great attraction, with properties that need refurbishment but with a good amount of land selling for less than 60,000 GBP’s in Spain. For 170,000 GBP’s it is possible to get a three bedroom property with two bathrooms, roof terrace and sea view on the Costa Blanca.

However, purchasers who do not have the cash to buy outright are faced with a tough decision. They must choose whether it is better to raise money in the UK against any existing property and pay cash for the overseas home, or take out a mortgage in the country where the holiday home is located.

Most people choose to have a mortgage in the UK. David Hollingworth of London & Country Mortgages said: “They know and understand the UK system and feel more comfortable with it.

“Generally I believe it is better to keep any loan in the same currency as your income. That way you do not have currency fluctuations to worry about.”

But Ray Boulger of the mortgage broker John Charcol takes the contrary view, that asset and loan should be in the same currency. “That way, if the currency moves against you, the value of the loan falls by the same amount as the value of the property.

“I also think people make too much of the possible exchange rate problems. Typically, you would pay an interest rate of about 3.5pc for a euro mortgage. Even if the exchange rate moved against you by a tenth, that would only raise your effective rate to 3.85pc, still well below the UK level.”

Full story from Expat telegraph