Property Finance:
How can you finance your new investment
Mortgage types
A typical way for international property buyers to finance their investment is to secure a loan against it, known as a mortgage. There are, however, a few types of mortgages clients can consider, and each has its own advantages and disadvantages. Mortgages are typically categorised in two main types – interest only or capital and repayment:
An interest-only mortgage is a loan secured against a property where the repayments simply service the debt. If you choose the interest-only mortgage, you are only repaying the loan’s interest. This may be for the initial years of the mortgage, or indeed for the entire duration of the loan.
The advantage of an interest-only mortgage is that it offers lower monthly payments as you are only covering the interest. However, after the interest-only term expires, the debt still needs to be repaid in full. Interest-only mortgages give you an option to pay it off at the end of the term by a lump sum. This may be from the sale of the asset, or from wealth accumulated elsewhere.
Capital and Interest (Repayment) Mortgage is a popular mortgage type and a widely available traditional mortgage repayment option. With a repayment mortgage, you make monthly repayments for an agreed term until you have repaid both the capital and the interest in full.
When you start your mortgage, the majority of the repayments will initially service the interest element of the loan. Therefore, if you want to repay the mortgage early or move house in the first few years, you’ll find that the mortgage balance won’t have gone down by much. As a general rule, your mortgage balance will get smaller every month and, as long as you keep up the repayments, you will repay the mortgage at the end of the term.
Interest-Only Mortgage
An interest-only mortgage is a loan secured against a property where the repayments simply service the debt. If you choose the interest-only mortgage, you are only repaying the loan’s interest. This may be for the initial years of the mortgage, or indeed for the entire duration of the loan.
The advantage of an interest-only mortgage is that it offers lower monthly payments as you are only covering the interest. However, after the interest-only term expires, the debt still needs to be repaid in full. Interest-only mortgages give you an option to pay it off at the end of the term by a lump sum. This may be from the sale of the asset, or from wealth accumulated elsewhere.
Capital and Interest (Repayment) Mortgage
Capital and Interest (Repayment) Mortgage is a popular mortgage type and a widely available traditional mortgage repayment option. With a repayment mortgage, you make monthly repayments for an agreed term until you have repaid both the capital and the interest in full.
When you start your mortgage, the majority of the repayments will initially service the interest element of the loan. Therefore, if you want to repay the mortgage early or move house in the first few years, you’ll find that the mortgage balance won’t have gone down by much. As a general rule, your mortgage balance will get smaller every month and, as long as you keep up the repayments, you will repay the mortgage at the end of the term.
More property finance options
There are also more creative types of mortgages and ways to finance your international property which are specific to your personal circumstances. As your situation and goals vary, the best solution is to contact the team at Lifestyle Property International for an initial talk about your property financing needs.
Mortgage Calculator & Currency Calculator
Use these mortgage and currency calculators to determine how much finance you can afford in your local currency for your desired property. You can estimate the mortgage amount that works with your budget by entering details about your loan requirement.
Contact us for detailed information on how Lifestyle Property International can help you find the best buy-to-let mortgage or simply a mortgage for your property abroad.
International Mortgage Experts
Besides sourcing investments, Lifestyle Property International also offers international mortgage brokerage services via Lifestyle Brokers. With over 15 years of experience and access to over 40 banks and lending institutions to compare loans, we can source and present you with the most cost-efficient and flexible ways to finance your property.
Our mortgage broking service includes assistance with prescreening, mortgages comparison and rate negotiation on your behalf, as well as application completion. This makes us able to tailor solutions to our expatriate and international clients looking for independent advice on mortgage solutions, such as:
- Buy-to-Let mortgages
- Refinancing
- Equity Release mortgages
- Interest Only mortgages
- Residential lending
- Commercial lending
Lifestyle Property International strives to offer a comprehensive and straightforward purchasing and property financing journey to our clients. Whether you are looking to finance your first investment property or are looking for a way to refinance an existing one, get in touch with us for an initial confidential conversation. Our mortgage advisors’ objective is to ensure that they present you with the best mortgage for your property and your circumstances.
Mortgage Security and Protection
Life can take unexpected turns, and mortgage protection insurance can ease your worries of losing your property if you happen to be unable to make your regular payments. Mortgage protection insurance is a form of income protection that will cover your mortgage payments if you are no longer able to, for example, due to redundancy or illness.
If you are concerned about your family’s future mortgage expenses, you could consider mortgage life insurance. This type of mortgage protection will pay off the rest of the mortgage debt if the borrower dies.
In some cases and countries, mortgage protection insurance is obligatory if you have less than a 20% down payment of the house price. However, in our opinion, it is a valid addition to mortgage costs and should be considered for all debt you may have.
There are many reasons why people buy investment properties, and there are as many reasons and individual circumstances on how and why clients want to protect them. Talk to our insurance experts from Lifestyle Insurance and find out more about mortgage security and protection options that are right for you.
