Obtaining an overseas mortgage as a non-resident is not an easy task. So, it’s no surprise that the majority of non-residents think it’s impossible to get one.
But, that’s not true…
In fact, an overseas mortgage is a great way for non-residents to unlock attractive financing rates, build wealth in stable jurisdictions, and diversify their assets.
Of course, approval can be difficult, many documents are required including a bank reference letter, and very few banks actually offer overseas mortgages.
Overseas Mortgage Applications
To obtain an overseas mortgage you will need to complete a mortgage application with a suitable bank, provide supporting documents, and prove creditworthiness. Of course, this is more challenging as a non-resident. So, banks typically require higher down payments and interest rates in order to offset increased risks.
But, for many applicants, the higher down payment and interest rates imposed on an overseas mortgage are comparable to those in their home country.
This can make such non-resident financing options extremely attractive for anyone looking to build assets in more stable jurisdictions.
In this article, we’ll share the information you need to know when applying for an overseas mortgage. Including who can apply for an overseas mortgage and the challenges you’ll likely face.
Of course, we’ll also discuss the potential benefits non-residents can unlock from an overseas mortgage. And lastly, we’ll share helpful tips on how to get started, including important questions non-residents need to ask before applying.
But, before diving in, if this is your first time visiting GlobalBanks, don’t forget to download your FREE Non-Resident Banking Starter Guide. It’s designed to help non-residents open accounts in top banking hubs around the world.
Why Apply for an Overseas Mortgage?
When someone wants an overseas mortgage, they’re typically looking to buy a second home, a vacation property, or an investment property in a foreign country.
In other cases, non-residents may be looking to purchase their family home in a foreign country while still completing the residency process.
In other words, they have yet to become official tax residents of the country and banks still consider them “foreign” when it comes to financing.
That said, there are other reasons to apply for an overseas mortgage as well, including…
Benefits of Getting an Overseas Mortgage as a Non-Resident:
- Purchasing a property with limited financial exposure
- Accessing better financing terms than your home country (client-specific)
- Earning a higher return on investment than your home country (client-specific)
- Unlocking alternative financing options you can’t find elsewhere
- Diversifying and building an asset base stable jurisdictions
Regardless of your reasons for wanting an overseas mortgage, if you can pass the lender’s requirements… chances are, you’re eligible.
And, even if you get denied by one bank, there are usually alternative financing options available to you as well. In fact, we’re going to share three overseas mortgage options with you later in the article, including the one you probably haven’t considered.
But, for now, let’s take a look at the challenges a foreign non-resident will likely face when trying to get approved for an overseas mortgage.
Challenges of Getting an Overseas Mortgage
Yes, obtaining an overseas mortgage as a non-resident can be a difficult process. But, as we’ve shared already, it’s not impossible. Far from it.
The key to being approved for an overseas mortgage is being prepared. This means preparing your documents, preparing your finances, and ensuring you can meet the lender’s requirements before applying.
In some instances, you may even need to start preparing months in advance. More on this below.
Of course, if you’re applying for an overseas mortgage through a traditional bank, you will also need to pass standard bank due diligence. So, it should be no surprise that each client can face different challenges, depending on their client profile and risk factors.
To help you prepare for these challenges, we’ve put together a list of the most common challenges non-residents face when applying for an overseas mortgage.
Challenges of Getting Approved for an Overseas Mortgage
- Finding a bank that issues overseas mortgages
- Passing standard bank onboarding requirements
- Demonstrating foreign sources of wealth and income
- Personal visit is sometimes required (varies from bank to bank)
- High non-resident down payment and interest rates
- Navigating international tax considerations
Of course, every overseas mortgage applicant is unique. So, the specific challenges that you will have to overcome, will vary slightly based on your client profile.
Likewise, the specific property and lender that you’re considering will also impact the challenges you face and the requirements you need to meet.
So, before applying, it’s important to understand the specific benefits that you’re looking to access and make sure the lender you’re considering can meet your requirements.
With this in mind, let’s take a look at the questions you should ask before applying for an overseas mortgage to confirm you’re considering the right lender or bank.
Questions to Ask Before an Overseas Mortgage
The following questions are important to consider before applying for an overseas mortgage. The answers you receive and the resulting actions you take can save you time and money.
Questions to Ask Prospective Lenders
- What interest rates are available for overseas borrowers?
- What is the required downpayment for overseas borrowers?
- Are there minimum and maximum property value requirements?
- What is required to verify overseas income?
- What is required to verify overseas creditworthiness?
- Can an overseas mortgage be obtained for investment properties?
- Do you need to be physically present for the mortgage to be approved?
- Are there additional closing costs for overseas borrowers?
- Are there additional insurance requirements for overseas borrowers?
Of course, these are important questions to ask before applying for an overseas mortgage as the answers can steer you to the right bank or lender.
So, now that you understand the challenges and know which questions to ask, let’s explore how to successfully apply for an overseas mortgage.
How to Successful Apply for an Overseas Mortgage
Yes, you’re going to have to jump through hoops when applying for an overseas mortgage. And, as a foreign non-resident, the process usually takes longer to complete.
But, if you know which lenders will accept your application, you’ve already overcome one of the biggest challenges. So, in this section, we’re going to help you identify possible lending options to consider.
Where to Get an Overseas Mortgage
1. Traditional Mortgage Through Bank Financing
While this option may be obvious, not all domestic banks offer mortgages to non-resident clients. That said, if you have an existing relationship with a local bank in the country where you want to purchase, it’s still worth asking whether any options do exist.
If you don’t have an existing bank account, or your local bank doesn’t offer overseas mortgages, then it’s important to confirm whether a bank offers such services before establishing a new banking relationship.
But, it’s important to note that domestic banks offering overseas mortgages typically have much higher down payment requirements and higher interest rates than other options.
For instance, if you obtain an overseas mortgage from an international bank instead, you could receive much more favorable terms. Likewise, as we’ll explore below, alternative financing options can also offer attractive terms.
2. Overseas Mortgage from an International Bank
To be clear, when we say “international bank”, we’re referring to a bank that’s operating outside the country where you want to buy real estate.
In most cases, international banks that offer overseas mortgages specialize in services for foreigners, non-residents, and expats. So, it should be no surprise that they are often located in banking hubs that cater to such clients.
Additionally, most of these banks have large multinational footprints. So, they can usually offer very competitive international financing rates. In certain instances, such rates can even compete with those being offered to resident clients locally.
Of course, not all international banks offer overseas mortgages. And, those that do typically only offer them in specific countries. So, it’s important to know which banks offer financing in the country where you want to buy.
3. Alternative Financing Through Developers or Sellers
An alternative financing option is that of developer or seller financing. This can be an option when considering new construction (developer financing) or existing properties (seller financing).
But, as always, you need to have very good legal advice when considering such alternatives. A good lawyer will be able to ensure that the title of the property and the lien against it are in place with the necessary authorities. This is a critical step to protecting your ownership of the property you buy.
Of course, payment schedules and terms can vary widely depending on the arrangements you agree to with the developer or seller. However, you may find that such terms are often more attractive than you can find from a traditional lender.
As you can see, non-residents interested in purchasing an overseas property have several financing options to choose from. But, in most cases, the first step in securing the right overseas mortgage is having the right international banking relationship.
So, if you’re looking to secure an overseas mortgage, we can help…
Start the Process Today
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