Should You Consider a Mortgage in Another Country?

There are several good reasons to consider a mortgage in another country. Property is a good investment choice. The returns on your investment are greater if your second property is in a foreign country. Here’s why.


As an Investment

If you want to diversify your portfolio, property is usually an excellent choice. This is very different from buying stock that will appreciate so that you can sell it at a higher price and pocket the profit. Or it depreciates and you make a loss by having it traded in the stock market for less than you paid for it. 

A home is an investment that doesn’t stand idle. It is purchased for the sole purpose of renting it out to make an extra monthly income. Thus, buying property has two perks. It increases your assets as well as your income. This subsequently raises your net worth.


As an Opportunity

The income you make from renting a property may enable you to leave a nine-to-five job and do something else you have really wanted to, like becoming an artist or starting a rock band. Or it could simply give you a break to study through university and change careers.

You may also decide to go full-time into managing rental properties, buying more of these as you get approved funding. You will, in any case, need to make arrangements for your rental property to be managed by someone who stays in the area where the property is. Tenants need an accessible manager who can deal with issues on the ground, such as plumbing problems. The owner requires a competent manager who can receive funds, ensure that the place is well looked after, and find new tenants when existing ones relocate.

Regardless of the route you choose, your life could change significantly for the better.


As a Vacation or Retirement Home

Perhaps you are thinking of buying a property in a foreign country to use as a holiday home until you retire. You can still make an income by letting it out for shorter periods, e.g., on a month-to-month basis or for people who want to holiday in and out of season.

When you retire, you can spend the rest of your life in a beautiful, sunny location. The cost of living in many foreign countries is much lower than in America. You will then be able to rent your property in the USA or sell it to fund your retirement. 


Cheaper Options

Purchasing a property is likely to be much cheaper than buying a second home in the USA, depending on the country of your choice.

Whereas a US property may cost you $500,000, you can get an equivalent second home in Spain for $187,640 or in France for $209,520. A property in Portugal will set you back $362,630. A rural retreat in Italy goes for $274,850. These four countries are the most selected locations for buying property in a foreign land. Next ranked are Greece, Cyprus, Turkey, Bulgaria, and St. Lucia in the Caribbean.

Singapore is another preferred destination, with many people buying property there to gain foreign residency. PropertyGuru helps people find properties in Singapore. Additionally, they assist with finance, such as a mortgage, for qualifying clients. 


Financial Diversity

There are two types of financial diversity you can benefit from by buying property in a foreign country: true investment diversity and currency diversity. Firstly, with true investment diversity, it is important to split your portfolio across different markets. If all your assets are in one basket, such as all your owned properties being in America, then you are at risk of a buyers’ market in that country lowering the value of your assets. If you were to sell your properties, this would be at a loss compared to what you paid for them. However, if you had only one property in America and another in Singapore, their markets would behave differently, so spreading your risk.

Secondly, currency diversity is investing in markets with diverse currencies. Rather than being held hostage by what the dollar is doing, you could own a property in the UK that is dependent on the pound.

Your rental income will also be in different currencies and markets, which is a third benefit.


Hard Assets  

Hard assets, such as consumer goods and property can never decline in value to zero. This means that even if the market is not in your favor, you will still have an asset with some value. Over time, the market could swing the other way, making your property more valuable than what you initially paid for it.


Foreign Residency

Once you own a property in a foreign country, it may give you the edge in being awarded residency status. Residency visas are given to people who own property and have invested in that country. This means that you can live in that country.

Buying a home in a foreign country has many positive aspects and is worth pursuing.

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