Come in, the water's lovely

The doom and gloom surrounding the UK mortgage market does not necessarily reflect what is going on elsewhere in the world. Now may in fact be a very good time for your clients to think about buying abroad, even if the current strength of the euro makes it seem like a less attractive prospect in some locations. And it's not necessarily the case that mortgage availability is hard to come by overseas. It does, however, depend on where your clients want to buy.

Unlike Britain and the US, where obtaining a mortgage has become more difficult, many European countries appear to be weathering the ‘credit crunch' storm in reasonable shape.

The French market, for example, has remained very calm. French banks are immensely careful about whom they lend to and, to limit risks, most of them spread their investments much more widely than those in the US or UK. The French system also means that lending is very much based on affordability and only those people who can really take on the debt are allowed to do so. As France is in a relatively secure situation, its lenders are still willing to lend and it's sometimes possible for your clients to borrow up to 100% of the value of their overseas property there. Obviously there are certain restrictions on who is eligible for such a loan, but it's still pretty normal to obtain up to 80% of the purchase price.

Spain has never been heavily involved in the sub-prime lending market, and families have not stretched their incomes as much. And while some Spanish lenders have reviewed their terms, clients can still find banks that will allow them to borrow up to 70% of the value of the property.

In Portugal, it is possible to borrow up to 80% of the value of the property, and the situation is similar in Italy. In Cyprus, borrowers can get up to 70%, rising to 75% in Turkey. In most European countries, lenders assess borrowers on their ability to repay the loan rather than on income multiples alone, and the affordability calculations they use have not really changed over the last year.

Compare this, however, with areas like Dubai where we can now only obtain finance for clients on villas, not apartments, and the loan to value ratio has decreased from 90% to just 50% in recent months. And in the USA, lending has also become more restricted - a deposit of around 50% is required in order to achieve a decent mortgage rate.

Despite the current turmoil in the British mortgage market, there is still a strong appetite for people buying property overseas, particularly those who are planning to retire abroad or to live permanently overseas. But there could also be many clients who are interested in investing in property, but who may not yet have considered foreign opportunities. And remember that there are many people who already own property abroad, who may not have considered remortgaging, or thought it necessary. With interest rates currently so low, remortgaging could actually produce some very cost effective results for all concerned.

As the euro is strong right now, equity in many second homes abroad is now worth a great deal more when converted back to sterling. Many people who have unencumbered overseas properties, or who have seen price growth since they were bought, are releasing equity to pay off debts back in the UK or to help buy UK property. Some are releasing cash to inject into their UK properties to bring down their loan-to-value ratios, especially if they're hoping to switch to a new mortgage deal. Others simply want to switch their overseas mortgage to a significantly cheaper rate and benefit from lower monthly repayments.

Over the last few months, we've seen an increase of around 20% in the number of enquiries received and quotes issued for European mortgages. Recent rate cuts by the European Central Bank are helping to reinforce the general feeling of growing confidence amongst borrowers, and the fact that Sterling is starting to claw back some value has also given them a boost. When you combine this with the lower property prices that we're now seeing in locations such as France, Spain and Portugal, it simply means that European property has become more affordable.

Spain and France continue to top the list of most popular destinations for Brits buying property abroad through Conti, proving the enduring attraction of the more established destinations. Cyprus and Portugal also remain very popular. However, the appeal of Turkey is rising fast, becoming one of the top investment destinations in 2009 - we've recently seen an increase of 65 per cent in mortgage applications for Turkish properties. It offers some great property prices and all the benefits of its Mediterranean location, minus the effects of the strong euro. Tourism there has risen dramatically over the last few years, with predictions that it will reach just under 30 million visitors in 2009. This will ensure that demand for quality rental properties in the popular tourist areas will continue to outstrip supply.

Over the last 12 months, we've also seen a significant increase in the number of buy-to-let investors turning their attention to the overseas property market. The biggest rise was in the first six months of that period, due to the UK buy-to-let market drying up, whereas mortgage funding has generally been more obtainable overseas, and there have also been some great property bargains available. More recently, the drop in interest rates has also contributed to the attraction of this market, particularly in Spain, France and Portugal.

There has also been a big rise in the number of overseas property owners renting out their homes to holiday makers recently, which can be a great way for clients to finance their second home.

The overseas mortgage market, although having to adapt to challenging times, is alive and well, presenting intermediaries with the perfect opportunity to get involved and to consider it seriously as a source of additional income. In fact, recent developments from Conti make this even more possible. Mortgage Brain's new overseas sourcing module, launched in partnership with us, allows brokers to process enquiries and applications for overseas mortgages as simply as if they're dealing with a UK mortgage. And, by receiving an introducer commission, it means you can earn a valuable new source of revenue as part of your normal mortgage advice and sales processes. We've also just launched a new online sales toolkit, offering ready-made sales letters, brochures, newsletters, top tips and a free weblink, providing everything you need to generate overseas mortgage sales from your existing client base. It costs nothing and means you can promote this service with very limited outlay from your own business.

So what are you waiting for?

Micheal Axelrod, is Commercial Director at Conti, the overseas mortgage specialist

For further information, see www.mortgagesoverseas.com