A significant number of expats who move overseas are more than happy living on rent, although there are others who prefer owning their own homes. While buying a home requires that you pay attention to different aspects, if you plan to buy one outside of your home country, matters may get even more complicated. Fortunately, a little groundwork will hold you in good stead.
Consider the Trade-offs:
When you move to a new country, buying a home largely limits your ability to explore new regions, which you get to do if you’re renting. The money you pay as down payment stays invested in the house, and you cannot use for other investments such as stocks and bonds. Besides, the cost of servicing your new home loan might end up being a burden, especially if you have an existing mortgage in your home country.
Pay Attention to Local Regulations:
Start by determining if you’re allowed to buy the property of your liking in your new country of residence. For instance, if you wish to purchase a property in Singapore, the Residential Property Act (Chapter 274) has a bearing on whether you may or may not qualify to buy it without government approval. While you may purchase properties categorized as “non-residential” or “non-restricted residential” without government approval, buying a “restricted residential property” as an expat requires that you get government approval.
If you plan to buy a property in India, regulations require that you qualify as a ‘person resident in India’. Buying a home in the United States or the United Kingdom, on the other hand, comes with very few restrictions.
Real Estate Agent Fees
Real estate agent fees tend to vary from one country to the next. In Singapore, sellers usually pay 2% for Housing & Development Board (HDB) properties as well as private properties. On the other hand, buyers pay 1% for HDB properties and nothing for private homes. In the UK, while sellers need to pay 0.75% to 3.5% as fees, buyers pay no fees at all. Buyers don’t have to pay fees in the U.S. Buyers’ fees in India may vary from 1% to 2%. In Germany, a buyer may end up paying 2% to 6%.
Getting a Loan
Eligibility criteria and restrictions for getting home loans tend to be region-specific. In Singapore, you may qualify to borrow up to 90% of the home’s value if you are in a strong financial position. If you’re unable to meet the criteria to qualify for the top bracket, you may still get a loan of up to 80% of the home’s value. If you have an existing mortgage, you can borrow up to 60% of the home’s selling price.
If you plan to purchase a house in the U.S. or the UK, expect to pay at least 40% of the home’s selling price on your own.
Making the Down Payment
Instances of expats making their down payments using foreign currencies are fairly common. Given that a down payment toward a house involves a large value transfer, it may be worth your while to compare different overseas money transfer companies. Like banks, the top players in this field such as InstaReM, TransferWise, WorldFirst, and OFX provide high levels of security. In addition, they also tend to offer better exchange rates and charge lower fees.
Buy a home in a foreign country may be simpler than you imagine, provided you meet the required eligibility criteria. With a steady source of income, you may even qualify for an expat mortgage. However, it is important that you start