We're off to sunny Spain and France and Italy...

As ever more Britons fly away to foreign hotspots in search of second homes, Harriet Meyer sees how to plan a purchase
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The Independent Online

The appeal of owning a place you love in a climate you long for is sending more and more of us jetting off in search of a dream holiday home or permanent residence in the sun.

Accessibility and affordability have boosted interest in foreign property, with people buying homes as long-term investments and also as escapes.

The number of British households owning a second property abroad has risen by around 85 per cent in the past 10 years, from 89,000 to 165,000, according to research from the Nationwide building society.

Spain is the first choice for these people, ahead of France and Italy, while Cyprus, Dubai, the US and Australia are all popular holiday home locations.

With house prices still high here in the UK, it is no great surprise to find so many buyers going abroad, where prices can be a lot lower. You could, for example, get a two- or three-bedroom apartment near the sea on Spain's Costa Blanca for about £150,000, according to Sean Adams, the European manager of the international department of broker Savills Private Finance.

Before deciding to take the plunge, however, it is vital you do your homework. Viewing properties overseas may pose practical problems, but you must see what you're buying before making an offer. Take the trouble, too, to visit at different times of the day, or even times of the year. Check that the area where the property is located has all the facilities you need, such as medical services, local transport and shops.

When buying abroad, be aware that property ownership, conveyancing and tax rules vary widely - even within the EU. Make sure that you familiarise yourself with the relevant regulations. The key here is to get good advice from the start and to make use of recognised estate agents and qualified legal advisers throughout the process.

Once you have found your property, you need to decide how you're going to fund the purchase. This will come down to a choice between a UK and an overseas mortgage.

"If you have sufficient equity in your home in the UK, you could remortgage to a new lender with a better rate to finance the purchase," says David Holling- worth from broker London & Country. "Or you can secure the mortgage against the overseas property."

The good news, he says, is that several high-street lenders are now offering deals and mortgage products for homes overseas.

For those wanting to buy in Spain, for example, the Norwich & Peterborough building society - a lender specialising in home loans for Spain and Gibraltar, will lend in sterling. Among the mortgages on offer is a deal fixed at 3.84 per cent for two years, or 5.19 per cent for five years. N&P will lend up to 75 per cent of the valuation on a property bought for £60,000 or more, and loan terms are up to 20 years.

Alternatively, you could use a specialist overseas mortgage broker, such as Conti Financial Services. Conti sources loans in the local currency from foreign banks in a host of countries. Taking this route can have its advantages: interest rates tend to be lower on euro and dollar mortgages than on sterling loans. However, your repayments will vary in line with the exchange rate.

As well as the mortgage, you must budget for the extra costs involved, such as legal and registry fees, stamp duty and local taxes.

If you are thinking of buying in Spain, for example, expect to pay about 10-12 per cent of the purchase price to cover various taxes and legal fees.

Mr Adams of Savills Private Finance says professional help is essential: "You would be well advised to speak to a notary or lawyer in the country you wish to buy in, as well as a tax adviser in the UK."

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