Overseas property investment – a safe option

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by Kay Mitchell

Property investment in the UK is becoming a worry with some financial experts believing a crash in the housing market is imminent. A vast number of first-time buyers are borrowing at least 5 times their salary and figures from Abbey National show that the average loan has doubled in the last 4 years. Statistics show that over 6% of homeowners are struggling to meet these payments.

Figures published by Edward Jones, the financial adviser, have established that 30% of 45-54 year olds and 12% of over 55’s have not yet begun saving for retirement. However, 46% of 25-34 year-olds and 57% of 35-44 year olds have already started saving. A spokesperson for Edward Jones commented that the most worrying issue is the high percentage of middle aged people who have made no provision for their retirement.

The foreign exchange service, Moneycorp, have highlighted that investors can benefit from foreign currency mortgages and confirmed the popularity since the interest rate rise in the UK. These mortgages allow borrowers to take advantage of the low interest rates when purchasing property abroad.

Baydonhill, the property research company, has also shown that half of independent financial advisers (IFA’s) believe that the overseas property investment provides stronger returns with over 30% of IFA’s experiencing an increase in the sector within the last 12 months. It is also anticipated that this figure is likely to rise over the next few years as unaffordability pressures in the UK trigger investors to look further a field.

Many first-time buyers are investing in property abroad and an increasing number of those close to retirement are using this type of investment to fill a pension shortfall.