Finding and funding your dream home abroad

Whether it's a hill top hideaway in Greece or a beach hut in Australia, most Brits dream of moving to sunnier climes at some stage in their lives. Around 2.2m people already have a property outside of the UK and this figure is expected to double in the future. Low cost flights, cheaper holidays to exotic locations and the expansion of the European Union have lead to people looking further afield for property investment.

Spain remains the most popular location, followed by the US, France, Italy and South Africa. Experts recommend popular holiday spots as the best option because there will be good communications established and a local community that is used to foreigners. It will also be easier to rent out to other holidaymakers to recoup some of your costs.

Several magazines list foreign properties for sale, including Homes Overseas, Foreign Property News and Exchange & Mart. But the Internet is the best search tool for finding your dream home abroad. Doing your homework and thoroughly researching a neighbourhood is key when it comes to buying a holiday or retirement home.

"Treat buying a house overseas exactly as you would buying a house in the UK," warns Jeremy Davies, author of Which? Guide to Buying Property Abroad. "It's truly astonishing how many people enter into foreign property purchases with an abandon they'd never employ when buying a home in the UK.

"There are people who go on holiday, see somewhere once; fall in love; put in an offer then find they've committed themselves to an over priced ruin.

"Add to this to the sometimes over complicated legal systems of foreign countries, planning permission and language barriers, the whole process can turn into a living nightmare," adds Davies. Top of the to do list is to get as much independent professional help as possible.

Many people go it alone when they buy abroad, says Simon Conn of Conti Financial Services, "Rising house prices in Britain mean you can remortgage your home here, take the lump sum of money raised and make your overseas purchase as a cash buyer.

"That can seems quick and efficient but it means that you are solely responsible for doing all the checks on your new property and it is easy to cuts corners. If you take out a mortgage specifically for your new purchase, then your lender will demand that proper legal checks and surveys are carried out. In the long term, it will always pay to have them done and to pull out and look for a different property if any potential problems arise."

Several companies offer mortgages overseas, including Halifax, Abbey (which runs an overseas property service), Norwich & Peterborough Building Society and Barclays, which specialises in the French market.

You could also consider a mortgage in the local currency, but there are risks involved. The pound can move against the euro - if sterling falls in value, your payments will increase. Abbey and Barclays both offer euro mortgages but you have to be paid in euros to be eligible.

You will also need a reputable solicitor and valuer who is local. Ask your bank or mortgage lender, they should be able to help you find an English speaking professional. It is worth bearing in mind that in some countries lawyers act both for you and the seller, so make sure you're getting independent advice. Talk to a British lawyer before you sign anything, and remember you often cannot pull out of an agreed offer as you can in England and Wales.

Buying a property abroad has never been easier but you still need to tread carefully through a minefield of financing, local taxes and legal issues.

What to look out for when buying abroad:

• Ask yourself, what do I want this property for? Occasional holiday home or renting? Don't start looking for a property until it's clear how it is to be used.
• Get expert financial and tax advice.
• Check estate agents credentials and be wary of developers offering to handle all legal and financial arrangements.
• Don't sign anything until a suitably qualified property lawyer who understands the legal systems of the UK and country in question has checked all documents.
• Make sure you have all necessary documentation including visas and work permits.
• Ensure you have registered your residency status with both the Inland Revenue in the UK and the appropriate authorities in the country you are moving to.
• Check medical arrangements.
• Arrange bank accounts in the country you are moving to.
• Make sure any regular payments in the UK are met while you are abroad and let your bank know of the move.
• Advise insurance companies about changes that might affect policies including buildings and contents cover, health insurance and pensions.
• Tell everyone about your change of address, including National Savings just in case your premium bond numbers come up!
• Check your Will and make sure it takes into account rules in the country where you will be living and any inheritance tax rules that might apply.