The current economic turmoil which is battering the British housing market has not totally dampened the spirits of those buying overseas. The appetite for property abroad remains strong from those who plan to retire overseas, emigrate or invest in the overseas property market, due to the value for money (some significant price reductions being available) and the lifestyle on offer.
The weak pound may have reduced many people’s budgets for foreign property, but if as many believe, the market is set to bottom out, now could actually be a great time to invest, before prices start rising again. People seek the best possible value for money and with interest rates being so low, overseas mortgages are simply now more affordable.
Overseas mortgages are already increasing in popularity, with many brokers looking at this market as a potential source of generating additional income. But the opportunities do not stop there – the overseas remortgage market also holds great potential. More than two million Britons currently own a property abroad, and with interest rates at an historic low, the number of people looking at the refinancing options available is increasing, particularly in the Eurozone. Here at Conti, we have seen levels of overseas remortgaging business rise significantly since the start of the year.
What is more, with the current strength of the euro, equity in many second homes abroad is now worth a great deal more when converted back to sterling. Many people who have unencumbered overseas properties, or who have seen some price growth since they bought, are releasing equity to pay off debts back in the UK or to help buy UK property. Some simply want to switch their overseas mortgage to a significantly cheaper rate and benefit from lower monthly repayments. Others want to release cash to inject into their UK properties to bring down their loan-to-value ratios, especially if they hope to switch to a new mortgage deal.
So, whereas over the last ten years, many people have raised money against their UK property to buy a property abroad, we now see a reversal of the trend.
Brokers should also bear in mind that due to current exchange rates, a mortgage could even be a good idea for clients who think they do not need one, especially if they are purchasing in the Eurozone. If a buyer pays for a property with a mortgage, their immediate exposure to currency fluctuations is much lower than if they pay in cash, as they will only have to exchange the money for their deposit and fees for now. If you have any clients who are lucky enough to be cash buyers, it may be appropriate to arrange a mortgage for them until sterling gains strength, at which point they can pay it back.
The importance of this market has become all the more evident with the launch of Mortgage Brain’s new overseas sourcing module, in partnership with Conti. It allows brokers to process enquiries and applications for overseas mortgages as simply as if they are dealing with a UK mortgage. And by receiving an introducer commission, it means that you can earn a valuable new source of revenue as part of your normal mortgage advice and sales processes.
This strategic partnership speaks volumes about the potential of the overseas mortgage market, which is now a core part of Mortgage Brain’s mainstream service. It is also important for Conti to adapt to the demands of the changing market, and ensure that our business model reflects all of a broker’s needs. In time, Conti will act as a one-stop-shop, offering intermediaries’ clients everything they require to buy, sell, let or own property abroad.
So, while overseas mortgages may not be a market that brokers have considered to date, it could well be that your existing portfolio of clients includes several who fall into this category. People who plan to retire abroad or to live permanently overseas, or those who are interested in investing in property, but who may not yet have considered foreign opportunities. It is also crucial to remember that there are many people who already own property abroad, who may not have considered remortgaging, or thought it necessary. But with rates being so low, it could produce some very cost-effective results for all concerned.
Against the backdrop of the present UK mortgage climate, can you really afford not to get involved? n
