Why Buy Property Overseas? A Case History.
By Hugh Griffin, Fri Dec 9th
Copyright 2005 Hugh Griffin
This is a true case history detailing the purchase of a holidayhome overseas. By describing a real-life experience of buying ahome in Spain we explain why people buy property overseas andshow how to buy an overseas property with minimum outlay.
Mr and Mrs Jones bought an apartment in Spain in 2002 for 107000euros. It is a lovely three bedroom apartment only 10 minuteswalk to a beautiful beach. They had it valued recently (October2005) for 155000. An increase of 45% over three and a halfyears. The reason they had it valued was because they wanted toremortgage. In fact the mortgage company's valuer wasover-cautious because an identical property next door wasrecently on the market for over 200000 euros. So the realincrease in value is probably even greater than 45%. If theapartment was sold today it would
almost certainly fetch morethan 155000. The main point here is that it is worth a lot morenow. This reason alone is sufficient incentive to buy a homeoverseas. It is simply a great investment!
The second benefit of owning a home overseas is that the ownersstay there, free, whenever they want. All they pay is theflight, car hire, and a payment to the caretaker to prepare andclean the apartment.
The third point, and this is an important one, is that theowners did not actually pay 107000 for the property. No, theypaid only 20% and borrowed the rest through a mortgage in Eurosat a very low interest rate. So they only had to find 21400euros plus around 10000 euros for solicitors fees, taxes, agentsfees etc.
The fourth point is that the property is rented as a holidayhome (short term lets in summer and long term lets in winter)when the owners are not using it. The owners get an income fromholiday lets of around 5000 euros per year which pays themortgage !!!.
So, to recap, Mr and Mrs Jones spent about 32000 euros (21400deposit plus costs) for a home overseas. The mortgage andrunning costs are paid for by rental income. The owners get tostay there whenever they like (usually about twice a year). In15 years time when the mortgage is paid off Mr and Mrs Joneswill own an asset worth, at today's prices, at least 155000euros. In 15 years time it will probably be worth much, muchmore!
This is why people buy a home overseas!
Today, Mr and Mrs Jones have remortgaged their overseas propertyfor the maximum amount based on the recent valuation. Guess whatthey are going to do with the released equity? That's right!They are going to use it to buy another property near theirexisting overseas property. Soon they will own a second overseasproperty without having to spend any of their own money. thefirst property paid for the second one!
About the author:Hugh Griffin is an independent travel writer and has written anumber of highly acclaimed travel guides including Buying a Homein Spain (http://www.buying-a-home-in-spain.com ) andIndependent Holidays in Spain(http://www.horizonpress.com/diy-holidays/free-book-spain.html).
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