With the strong pound boosting buyers’ purchasing power, opportunities in the overseas mortgage market are ripe for the taking, says Clare Nessling, director at Conti
Winter often acts as a catalyst for people seeking a little slice of life in the sun, and this year should be no different. Quite frankly, there’s never been a better time to buy overseas property.
Bargain property prices and low interest rates are boosting buyers’ affordability, but the current strength of sterling is having the biggest effect on their budgets. This is lopping tens of thousands of pounds off property prices in the euro zone, with a €200,000 home costing around £19,000 less than it did in the summer of 2013.
And it seems that buyers are returning to the market in their droves. Our enquiry levels have shot up by 37% so far this year, compared with 2013. Confidence is back, and there are plenty of British buyers who are more willing to explore overseas opportunities in their search for better investment potential.
It is, therefore, a great time to consider the overseas mortgage market as a lucrative new revenue stream. We’re currently registering around 60 new brokers every month, and many who come to us as the result of a single client enquiry have been surprised at how easy the process is and are now actively seeking more overseas opportunities. It can be an easy earner for you too – we handle the case while you earn valuable commission.
But don’t just take it from us. David Scotland, a partner at Higgs Boson Private Client Finance in London, recently became involved having been approached by a client who required finance to buy a property in France. “My expertise lies within the UK property market, and I knew that the overseas mortgage market would be a whole new ballgame,” says David. “Each country presents a myriad of national and local laws, customs, foreign exchange requirements and language barriers, and for the process to be managed properly, you need to understand all the different lender requirements. It would have been like fumbling around in the dark if I had attempted to understand and manage it all.
“I was therefore happy to hand over to the experts, and I’m very glad that I did. The whole process was taken care of, from start to finish, but I was kept fully informed at every stage. I even had some business referred back when I was informed that the French lender required sufficient life assurance to cover the mortgage debt, so I earned commission for that as well as for introducing the mortgage.
“Having a specialist involved really took the pressure off, and everyone was happy with the outcome, especially the client, and that’s the most important thing. I have great confidence in what can be delivered, so would have no hesitation in handing over to Conti when the next opportunity arises. It also means that I can earn valuable revenue without any extra time being taken out of my day.”
Buyers sticking with tradition
When it comes to location, buyers are sticking with tradition and the last year has seen a sizeable shift in interest for Spain. Prices in some of the most desirable areas of the country have fallen by up to 50% since 2007, and people who have been watching the market are going for it in case they miss out on the best possible deals. The situation in France is also very good. A slower property market has been pushing prices down there too, and under current market conditions, people are keener to sell and therefore more likely to be receptive to offers lower than the asking price.
Portugal is also growing in popularity again. The country’s property market was one of the worst hit by the financial crisis, but with its economy on a much sounder footing, the country has waved goodbye to its worst recession since the 1970s and this has provided a boost to investors’ confidence.
Mortgage availability
Quite understandably, overseas lenders have become a little stricter about whom they lend to, and they’re now judging each case on its own merits including what and where you want to buy, rather than relying on specific criteria as they’ve done in the past. Contrary to popular belief, however, there are many lenders who are still willing to provide finance, particularly if your client can prove that they have a sound financial profile. And rates are pretty good too, starting from just 4% for a variable deal in Spain, and from just 2.2% for a variable deal in France.
Come on board
There are many reasons to tap into the overseas mortgage market, not least the valuable commission-earning opportunities – an average of £600 per case. It’s minimum effort too – we take care of the case, while you continue with the day job.
Clare Nessling is director of overseas mortgages specialist Conti.