The overseas mortgage market could provide a valuable new revenue stream, writes Clare Nessling, director of Conti
With the dark nights drawing in and the cold air starting to bite, you couldn’t blame people for dreaming about owning a place in the sun. But bargain prices and historically low interest rates mean that it could be more than just a dream, and it may never be more affordable for your clients to invest in a little slice of life overseas.
Property prices overseas are at their lowest for many years, giving excellent opportunities for an investment or change of lifestyle abroad. When it comes to location, the new hot spots are actually the old favourites, with Spain and France topping the list as investors stick to locations they know and trust.
Viva España
To say that the Spanish property market has experienced a turbulent few years would be a bit of an understatement. But confidence appears to be returning at last with British buyers returning in their droves. In November alone, Spain has so far accounted for 43% of enquiries received at Conti, higher than any other country including France. The story was similar in September and October, with Spain outperforming any other destination.
This is the first time since 2008 that Spain has accounted for so many enquiries over so many months. A number of factors are pulling buyers in. Tourism is booming, access is easy and the culture is familiar, but it has also become much more affordable – mortgage rates are very low, the pound has been getting stronger, and prices are still bottoming out in some areas. It’s a great time to buy and people who have been putting their plans on hold for the last year or two are taking advantage of the conditions open to them, and deciding to go for it before they miss out on the best deals.
According to figures from the General Council of Notaires, the first six months of 2013 saw international purchases of property in Spain grow by 13.6 per cent compared with the same period in 2012. In addition, the Bank of Spain has reported that foreign investment in Spain reached more than €2,834 million in the first half of 2013, the largest amount recorded since 2004. And the British are still the biggest buying group.
Despite the recent boom and bust nature of the market, Spanish lenders are still willing to provide finance to foreign nationals, particularly if they can prove that they have a sound financial profile. Clients can generally borrow up to 65 per cent of the value of the property, and rates currently start from just 3.23 per cent.
Investing in a slice of la belle vie
When it comes to a sound overseas property investment, it could be said that France provides all the fundamentals. Borrowing costs have tumbled over recent months, and at the moment, mortgage rates are at their lowest in more than 60 years. Affordability has also been boosted by a slower property market which has been pushing prices down, and under current market conditions, people are keener to sell and therefore more likely to be receptive to offers lower than the asking price. And there’s the enduring appeal of easy access from the UK, better weather, and good rental yields. France also represents relative stability amid the global downturn.
Although France has been weathering the global financial storm pretty well, French lenders have understandably become slightly stricter about whom they lend to, and they’re no longer relying on set criteria. It’s much more about the individual case and what/where clients want to buy. They’ll require more details about income and outgoings, so it’s important for your clients to have their accounts in good order. Mortgage rates currently start from just 2.1% and it’s generally possible to borrow up to 80% of the value of the property.
Tapping into the market
There are many reasons to tap into the overseas mortgage market, not least the valuable commission-earning opportunities. The average is around £600 per case placed, but last month our top earner pocketed an impressive £1,094 in commission from a Spanish mortgage.
The great thing is that it can be a really easy earner for you too – we handle the case while you get on with the day job. It’s as simple as that.
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