"With interest rates still at record lows, mortgages in all the favourite destinations are at rock bottom rates. They probably won't be by next summer"
It's that time of year again when thousands of families flee the UK's 'summer' and set off in search of warmer weather, a break from the office and perhaps, for some, a new home.
The Overseas Guides Company offer ten reasons why it can make good sense to buy a holiday home when you're there. They're keen to point out that theynormally advise against buying a home abroad without a huge amount of planning, but there is a place for spontaneity in every life too!
With British families heading off to the sunshine over the next couple of months, many will idly glance into foreign estate agent windows and find themselves wondering “what if?” and then “why not?” Some will return to the UK packing the deeds of a new home into their suitcase. Is that wise?
As one the UK's foremost campaigners for buying safely in the sun, you might be expecting Property Guides to warn you off buying a holiday home when you're actually on holiday. And indeed there are many reasons not to buy a property when you're in that relaxed mode, far from home, feeling warm and relaxed (and you've possibly had an extra glass of wine with your lunch). And of course, a lot of people have made money from selling timeshares to people on the seashore.
However, there are also perfectly sensible reasons for buying a holiday home when you're actually on holiday. Here are ten of them:
The “sniff test”
Multi-millionaire property investor James Caan refers to the “sniff test” with a new location, you can see for yourself that it has an intrinsic appeal without needing to listen to any salesman's patter. So why go all the way home, do more research and find yet more places? You could spend many months researching investment locations but if you have to persuade yourself about it it's probably wrong. Gut feeling is also an investment tool too.
If you love it, why wouldn't anyone else? If you are so wowed by a location that you want to buy there, then people like you will probably feel the same when you want to sell. Investors talk a lot about exit strategy, and that's yours right there.
The price of package holidays. Package holiday prices are up 6% across the board this summer, and at Thomas Cook by 9%. You can expect to pay around £1,500 to £4,000 for a family holiday in the sun, while many apartments even on the Mediterranean can be found for £40,000. And you'll get more than 10 holidays out of it.
You CAN have your cake and eat it
When you buy a holiday home you get holidays every summer but keep the home too, for ever. This is what Britain's Foreign Secretary would call having your cake and eating it, or which the Portuguese would call having the sun shining on the threshing floor while it rains on the turnip field.
With interest rates still at record lows, mortgages in all the favourite destinations are at rock bottom rates. They probably won't be by next summer.
You have already saved the price of going out to look at a location. Each subsequent viewing trip you make if you don't buy now will cost hundreds of pounds in flights, hotels and hire cars before you've even started. Why go all the way home, do more research and find yet more confusing options?
You're buying an appreciating asset (probably)
While there can be a fashion element to resorts, over the long term a prime location in an established resort will nearly always be a good investment. Unlike student property, local neighbourhoods or blocks of flats, there is a whole tourist industry based on keeping your location attractive and appealing – usually well-funded by government and a powerful tourism lobby.
Historically, holiday lets are profitable.
If it's raining and you're playing Monopoly in your holiday apartment, you probably won't lose from putting homes and hotels on your acquisition.
If not now, when?
Let's not pretend that this is really a spontaneous decision. You've always known you want a holiday home in the sun, but the processes seem so complicated, and it's hot, and you're busy… so nothing happens, for year after year. Now you're 90% of the way there, and you have the chance to shock yourself out of your inertia.
First impressions are deep and instinctive
Humans are emotional beings with a lot going on at a subconscious and instinctive level. Did you know that when you first kiss someone you are actually reading their genetic code? Or that when apparently random human friendships are analysed, statistically it is highly likely that you have a family history over generations? If the fates decide that you love a holiday location at first sight, the chances are that you'll love it forever.
Better exchange rate
Before you sign on the dotted line, remember to calculate the exchange rate. The good news is that you will get a much better rate than you are getting for your holiday cash! Call a currency specialist like Smart Currency Exchange to discuss your needs, on +44 207 898 0541 from your holiday location abroad, or on 0808 163 0102 if in the UK. If you are in Spain, pop into one of their offices in the Costa Blanca or Costa del Sol.
For all the good reasons to buy abroad, you should of course be careful.
Do follow these three simple procedures:
- Ensure you are dealing with a reputable estate agent. Proper shop premises are generally safer than someone you meet on the promenade!
-Calculate the cost of repairs into your costs. Around 1.5% of the property value per year is a good rule of thumb, or around €1,875 for €125,000 property.
- Speak to a good lawyer who speaks English and specialises in property. They should be independent of the estate agent or developer.