Foreign trips to holiday resorts often end up with ideas about buying real estate in the city you are visiting.
Today, such decisions are not only made by the richest Poles, show business representatives, and celebrities, but also by people who want to either invest capital or are simply looking for a place for themselves in a united Europe.
Buying a house, apartment or flat abroad is easy as long as you have enough funds on your account, although it always has a lower or higher risk. What? In the case of fashionable in recent years as an investment direction of Bulgaria, such a risk is an uncertain legal status. Foreigners can buy real estate there, but this applies to buildings or parts of them. The purchase of land, however, is – similarly to ours – still subject to so many legal conditions that it is almost impossible …
You need to pay attention to the location of the property
The most attractive ones, i.e. in the coastal zone, must be checked carefully. A few years ago, the Spanish government decided to clean up the chaotic buildings. And here we find an analogy with our law. The strip along the coast is protected and should not contain residential or guest house buildings. This provision has not always been followed by developers and individual investors. That is why many properties are arbitrary in terms of law …
A similar situation is in the already mentioned Bulgaria, where the investment explosion on the Black Sea is largely based on the disregard by law developers, not only of building regulations but also of environmental protection and unique nature.
Therefore, if we decide to buy property in another country – it is best to contact companies that specialize in transactions in this market. First of all, they know the legal tips inside out, and secondly, we have an additional guarantee of security. The broker is insured against risk and in case of any failures, we can pursue our claims and try to minimize possible losses.
This is particularly important if you want to buy a foreign resident in a loan, because such guarantees may be required by the bank.
Where can you borrow money for such a transaction?
Crediting real estate located outside of Poland is not the easiest financial operation. All because no bank will establish collateral on such property. However, for those who want nothing difficult, because a good solution that will allow us to buy an apartment or a house abroad is to separate the purpose of lending from collateral for the loan.
The bank may grant a loan for the purchase of an apartment abroad, but only on the condition that the collateral for the loan will be another property located within the borders of Poland.
Financial institutions are reluctant to accept collateral on real estate located outside our country because it causes difficulties or inability to recover if the loan is not repaid regularly.
However, if we have a property in Poland that can be collateral for the loan (because it is not encumbered with a mortgage), we have a chance to apply for a loan to buy the property abroad. The banks’ approach to this type of transaction is also not uniform and each time the analysis of applications will be particularly thorough.
It is worth noting that in some banks there is also a restriction on the location of the real estate being the purpose of the loan and a housing loan, you can credit the purchase of real estate located only in Poland. This means that these banks will be able to grant loans, but only as a mortgage loan. The client receives funds for any purpose and it depends only on what they spend them on. The basic result that results from this means a significantly higher margin and interest rate, and thus also a loan installment.
By definition, these banks apply the same pricing conditions for loans for the purchase of real estate regardless of their location.
The location of the loan collateral is important
This property must absolutely be located in Poland. However, as a result of the analysis, the bank can always decide to apply a higher margin or lower the acceptable level of LTV (loan to value) due to the increased risk of such a transaction.
Due to the complexity of the transaction, such applications are considered particularly thoroughly and the final loan terms can be determined only after analyzing the complete set of documents. Therefore, in some banks, the decision on the final qualification of the transaction is taken only after a thorough analysis of all documents.
This means that depending on the location and the specifics of the transaction, other banks may also grant a loan for purchase at the price of the housing loan, and not as a mortgage loan.
If you buy a property located abroad, you may also want to take out a loan from a bank in the country where it is located. In this situation, the application is processed in accordance with local law and the procedures of the bank to which we apply.