Purchasing real estate in the UK as an expatriate can be a great long-term investment. But as many foreign buyers consider the price of the properties and the mortgage interest, they tend to ignore other costs that may raise the overall cost of ownership. Knowing these hidden costs and planning can save you money and make better decisions.
Here we deconstruct the critical hidden expenses you need to consider when buying a United Kingdom property overseas and how you can effectively plan to do so with the assistance of a specialist broker, such as Expat Mortgages UK.
The Basics of Basing Property Overseas
There are additional strata of complication in the acquisition of property in the UK as an expat or a foreign national. You will also find extra fees, which UK-based buyers might not experience so strongly, in exchange rates and mortgage eligibility.
It can be achieved by going to specialised brokers such as Expat Mortgages UK, who can assist overseas buyers in identifying suitable rates and being able to see the entire financial picture- including hidden costs that only become clear during the initial planning stages.
Stamp Duty Land Tax: One of the Biggest Additional Costs
The most impressive example of latent costs connected with the UK purchase of a property is Stamp Duty Land Tax (SDLT).
Overseas buyers face an extra 2% surcharge on top of standard rates of SDLT for people who are not UK residents and buying residential property. This would increase your purchase by thousands of pounds.
To illustrate, when you buy a PS500,000 property as a non-UK resident, you may pay an extra PS10,000 in stamp duty in contrast to a resident of the UK. It is important to put this into your total budget at the outset.
Legal and Conveyancing Fees
A competent solicitor or conveyancer can guide you through all the legal considerations involving the purchase of a property, such as contracts, title transfer, local searches, etc.
Anticipate using PS1000 to PS2,500 in conveyancing fees, according to the value of the property and complexity. When purchasing abroad, you might need to pay a little extra in notarised and courier fees or international cheques.
Exchange and Transfer of Currency Costs
Currency appreciation and depreciation can significantly affect the ultimate price of UK-based property when purchasing it overseas. Even minor fluctuations in exchange rates can have an impact on affordability and will cause a change in the quantity you will transfer.
There are also bad exchange rates or excessive bank transfer charges that lead to losses for some expats. A specialist foreign exchange service, rather than traditional banks, can assist you in securing higher rates and lower transaction expenses.
Survey Fees and Property Valuation
During the sealing of a mortgage, lenders normally insist on an independent valuation of the property to make sure that the valuation corresponds to the market value. This may vary between PS300 and PS1,000 depending on the mortgage provider.
It is also prudent to order your own homebuyer survey, or structural survey in order to reveal potential problems in the property before the purchase. Such surveys can increase PS1,500 by another PS400, but can save you considerably should any defects be found early.
Mortgage and Broker Fees
Certain expat mortgage lenders impose product or arrangement fees, but a reputable expat mortgage broker, such as Expat Mortgages UK, can also arrange deals with lower or no fees by using exclusive lender relationships.
Some of the typical costs involved in mortgages are:
- Arrangement fees: PS1,000-PS2,000 is a typical value, and it may be charged over the amount of the loan.
- Broker charges: This is usually a fee of a small percentage of the mortgage value or a fixed fee.
- Early repayment fee: Pay when repaying early or refinancing.
These costs will be transparentized by a good broker and will aid in asking true total mortgage costs as opposed to headline interest rates.
Conclusion
Improper planning can cause situations where hidden costs can add up very fast when purchasing UK property outside of the United Kingdom. Legal expenses and taxes up to the exchange rates and maintenance bills, it is better to know the whole picture of cost and see that your investment is successful, and that you are not worrying.
Get the best expat mortgage offers, clear guidance, and professional service throughout with the help of partnering with Expat Mortgages UK. If you are confident enough to start your property journey today, then contact one of our professional expat mortgage experts.
