Recommendations on Funding Overseas(EU) Property Purchase

L

Latsug

Registered User
Messages
5
Have set aside a budget of € 500k with a view to purchasing in France or Portugal. The Plan is to spend 6 months in Ireland and 6 months abroad during the initial years
Current Status/ Financial Health

1. 370k Cash + 40K Shares+90 K Investment Fund = 500k
2. Current house fully paid off - Approx value of 500 k.
3. DB pension of 25k which starts in 2028 + 200 k Private Pension pot
4. Married,with no children & on current combined salaries (Gross ) of 80k
My current thinking is to fund 50% own resources & 50% Mortgage from abroad
Would appreciate inputs/thoughts etc
 
Those are two vastly different countries. Why do you need to buy though. There's a lot of work involved in managing a property abroad, and costs too. Portugal would be better than France for the winter, which I presume is what you are after. There are plenty of threads on this. Poster Leper has given excellent advice on this.
 
Looking Coldly at this and without Sympathy (and Hey! I own an apartment in Spain and it was my 2nd buy there) if I were you I'd ask myself a couple of questions:-
1. Can I make the investment pay? Of course, you know nobody buys for investment. It's for the kids and breaks in the sun. Yeah! From my experience you can make it pay, but you need to be cold and calculating. Something I'm not.
2. Can you get a mortgage in Ireland? It's probably better and easier managed than getting the mortgage abroad.

OK! I said a couple of questions, but I really meant a couple more!

3. Is tying up a large amount of your money putting any constraints or anguish on you? Only you can answer this.
4. Running Costs (outside of mortgage) will be around €2500 per annum inclusive off local taxes, utilities, maintenance, care. Can you take the hit every year?
 
Hi Latsug

You don't tell us your age, but as you have a pension pot available in 7 years, I presume you are 58 and will be working for the next 7 years.

Are you maxing your pension contributions? That should be your first financial priority. I don't know how the limit of 40% interacts with DB schemes. But you should sit down with a fee based independent financial advisor (e.g. Steven Barrett) and work out the best tax-efficient way of maxing your pension pot.

You can probably fund most of this from your salaries until retirement, but let's say that you will need €100k to top them up.

You will then have a well funded pension pot and so won't need an investment fund outside the pension pot.

So you should use the rest of your cash to buy the property and get a mortgage only for the shortfall. By the way, how will you fund the mortgage repayments?

It does not make sense to have a mortgage while having risky investments or, worse still, cash in the bank.

Brendan
 
Last edited:
The big question after maxing your pension is the timing of your purchase.

If you are still working and tied to Ireland, are you going to be able to spend 6 months of the year there now? If not, don't buy it until you can make maximum use of it.

It might also be worth renting a place for 6 months in your chosen destination at the start to make sure that you like the place and you will get to know the property scene. The worst thing would be to buy something now and when you get there find there is something wrong with it or there is some place you like a lot better.

If you rent for 6 months in a development, there is a good chance that you might come across someone who is selling in that development and you can buy directly without the other side facing huge auctioneers fees.
 
At your age, you should not look at this as an investment. You should buy a comfortable place where you want to live and within a comfortable price range.

If you can get an income from it through letting it when you are not there, then all the better, but that should be only a secondary consideration.

My understanding is that it's very difficult and expensive to borrow in Ireland for a property abroad and easier and cheaper to borrow abroad, so that is something you need to investigate. But Leper says the opposite and he has more experience in this area. Check out both.

And don't forget that you are not tied in to this forever. If after 5 years, your pension is not enough in Ireland to keep everything going, you can always sell your home abroad, or let it more often. Be prepared that if you do sell it, you will probably lose around 10% of the cost through transaction fees especially estate agent's fees.

Brendan
 
Last edited:
Brendan Burgess said:
It might also be worth renting a place for 6 months in your chosen destination at the start to make sure that you like the place and you will get to know the property scene. The worst thing would be to buy something now and when you get there find there is something wrong with it or there is some place you like a lot better.
Click to expand...

This is where I would start. When things get back to normal, you should holiday in a few destinations and stay for an extended period of time to find out where/what you like. Personally I wouldn't like to be tied to the same place every year and would prefer to rent and have variety.

Latsug said:
4. Married,with no children & on current combined salaries (Gross ) of 80k
Click to expand...

You have no kids so storing your wealth for inheritance should not be a consideration. Why tie 500k up in one foreign property? You've earned it so why not spend it. Will you want to or be able to spend 6 months abroad when you are in your 80's? What would 6 month rental costs look like in your preferred destinations? Let someone else deal with the hassle of maintenance and upkeep while you enjoy your winter breaks. And it gives you the flexibility to move around if you grow tired of the same place

Latsug said:
My current thinking is to fund 50% own resources & 50% Mortgage from abroad
Would appreciate inputs/thoughts etc
Click to expand...
If you did this at 2-3% interest, it would cost you €5-7.5k in interest plus Lepers €2.5k estimate of running costs. You would be paying €7.5-10k in costs for the privilege of owning the property. €10k on a 6 month rental would surely put you in a similar type of property without the hassle
 
Leper said:
Looking Coldly at this and without Sympathy (and Hey! I own an apartment in Spain and it was my 2nd buy there) if I were you I'd ask myself a couple of questions:-
1. Can I make the investment pay? Of course, you know nobody buys for investment. It's for the kids and breaks in the sun. Yeah! From my experience you can make it pay, but you need to be cold and calculating. Something I'm not.
2. Can you get a mortgage in Ireland? It's probably better and easier managed than getting the mortgage abroad.

OK! I said a couple of questions, but I really meant a couple more!

3. Is tying up a large amount of your money putting any constraints or anguish on you? Only you can answer this.
4. Running Costs (outside of mortgage) will be around €2500 per annum inclusive off local taxes, utilities, maintenance, care. Can you take the hit every year?
Click to expand...
Leper
Thanks for your forthright inputs which are very much aligned with your previous postings
Your postings have triggered me to re-evaluate

2. Currently in the process of seeking mortgage pre-approvals in Ireland & France ( biased towards France on an interest basis)
3/.4.Excellent points- I would have anticipated the ~ €2500 & could take the hit but I need to re-ask why?
 
I'm lost re "why" - Is it a breakdown of utilities you need? The utilities of water and electricity will be more if you stay there; my charge of €2500 per year is if nobody is staying in the place. Most of the amount will be in community charges/local taxes, obviously the rest with refuse which you must pay for the year. I haven't included internet charges. Depending on where you buy you could also be liable for a car parking tax.

All this is before you die. The taxes after your death can be punitive too.

I know I probably went overboard with the advice but I'm one of those guys who thinks the glass is half empty. Don't let me put you off. You sound like a sensible person.

I would point out in the first 5 years of your purchase you're carried along with the adventure of it and during this time You'll be wondering of my warnings.
 
Last edited:
My feeling is that Portuguese banks might be a bit more used to dealing with foreign buyers. Spoken English is generally better in Portugal than France. France taxes property quite heavily, not sure about Portugal.

I looked at average for 1-5 years fixed mortgage rates, Ireland is 2.8%, Portugal is 2.3%, and France is as low as 1.3%. So if you can borrow locally you really should. I have no idea if banks will deal with foreign borrowers of your age though.

Finally take professional advice on which country you want to be ordinarily resident in.
 
Just as a bye the way:- Covid and Brexit will affect property prices downward in Portugal, Spain and France.

Lots of Brits have lived for years in each of the mentioned countries under the radar. Portugal has instigated a forgiveness programme already, but France and Spain may not (I expect not). Consequently, many Brits will be heading for the softer rain climes of the UK. Spain has already updated its passport system in all airports.

When you own a property abroad you need somebody to look in in on the place too. Don't underestimate.

My favourite book:- A Year in Provence by Peter Mayle - Excellent Read to get you in the mood for France.
 
Leper said:
I'm lost re "why" - Is it a breakdown of utilities you need? The utilities of water and electricity will be more if you stay there; my charge of €2500 pm is if nobody is staying in the place. Most of the amount will be in community charges/local taxes, obviously the rest with refuse which you must pay for the year. I haven't included internet charges. Depending on where you buy you could also be liable for a car parking tax.

All this is before you die. The taxes after your death can be punitive too.

I know I probably went overboard with the advice but I'm one of those guys who thinks the glass is half empty. Don't let me put you off. You sound like a sensible person.

I would point out in the first 5 years of your purchase you're carried along with the adventure of it and during this time You'll be wondering of my warnings.
Click to expand...
my reading of the “why” was that latsug was questioning themselves as to why they would take that expense on and reevaluating their decision
 
Thanks once again Leper - my "why " question was self-directed ( ie re-evaluate based on your inputs).
 
Latsug said:
Leper
Thanks for your forthright inputs which are very much aligned with your previous postings
Your postings have triggered me to re-evaluate

2. Currently in the process of seeking mortgage pre-approvals in Ireland & France ( biased towards France on an interest basis)
3/.4.Excellent points- I would have anticipated the ~ €2500 & could take the hit but I need to re-ask why?
Click to expand...
Don't forget you have a pretty severe local property tax in France, Tax Fonciere. It can be quite penal. I once owned a 2-bed apartment in a holiday site in the South of France (sold it after the Nice attack because I thought things were getting iffy!). Anyway, on a 45 sqm apartment my property tax was €800 pa so, I can only imagine a €500k property is a lot bigger and therefore a far higher property tax
 
Sadim said:
Don't forget you have a pretty severe local property tax in France, Tax Fonciere. It can be quite penal. I once owned a 2-bed apartment in a holiday site in the South of France (sold it after the Nice attack because I thought things were getting iffy!). Anyway, on a 45 sqm apartment my property tax was €800 pa so, I can only imagine a €500k property is a lot bigger and therefore a far higher property tax
Click to expand...
Thank you Sadim
 
You must log in or register to reply here.
Back
Top