Buying a property overseas can be quite complex as each international territory will follow its own laws, regulations and have a base currency which may differ from those used in the UK. The language barrier can also be an added difficulty.
To help you in this process we have put together a guide to buying properties in Monaco using a mortgage.
Getting a mortgage for a property in Monaco
Monaco is a very popular location to buy property, whether as a private residence or as an investment, for many reasons – the climate, lifestyle and favourable tax system all combine to make it very attractive to prospective purchasers.
The language barrier is also not really a factor as most professional entities are usually fluent in a number of languages including English, however, exchange rate fluctuations could be an issue as Monaco’s base currency is the Euro.
Can a UK-based lender provide a mortgage for a property in Monaco?
This is only possible if they’re classed as an international lender, and they would usually need to have a presence in the market you’re buying in. If you’re looking to buy a property in Monaco and want to locate a mortgage lender to help complete the purchase you have three main options:
- An international lender with a presence in the UK
- Use an international lender based in a reputable offshore territory
- Use a local lender based in Monaco who can provide mortgage advice
The advisors we work with will be able to talk you through each of the above options and help you locate a lender that best suits your requirements. Give us a call on 0808 189 2301 or make an enquiry we will arrange for an expert to get in touch.
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What type of mortgage can I get if I’m buying a property in Monaco?
Despite being an independent principality, Monaco follows many of France’s mortgage practises, including the type of lending for property purchases. Both repayment and interest-only mortgages are available and are identical methods to those found in the UK.
The property market in Monaco is one of the most expensive in the world, therefore, average house prices are much higher than you would find in the UK or mainland Europe (typically in excess of €50,000 per square metre) .
Most private banks based in Monaco can offer mortgages with a loan to value (LTV) between 50-100% of the purchase price on the basis you can provide a sizeable amount of collateral to be used as assets under management (AUM), typically between 20-50%. The interest generated from the AUM can be offset against the overall interest.
If you’re looking for an overseas mortgage in Monaco you can expect a maximum LTV of 85%.
How long are mortgage terms in Monaco?
Typical mortgage terms are usually set at 5 years but can be renewed up to a maximum of 30 years. The more collateral you are able to use as AUM, the less overall interest you will be charged.
Traditional mortgage terms are also available with most international banks offering a loan-to-value (LTV) of up to 60%. By using the AUM option you would potentially pay less interest overall and your assets would be spread more diversely across a broader range of investments.
If you’d like to know more about the type of mortgages available for properties in Monaco, make an enquiry and we can arrange for an expert to contact you directly.
How can I arrange a mortgage for a property in Monaco?
When looking for a mortgage provider to help with funding for your Monaco home it’s important that you choose a lender who understands the risks involved with buying overseas property and has proven expertise in the following areas:
- Details of any tax liability potentially incurred as a result of the purchase
- Understanding of local laws and regulations (permits, VAT, planning consent etc)
- International exchange rate fluctuations
- Multi-currency mortgage facilities
This is where we can help. The advisors we work with are fully conversant with all aspects of international mortgage lending across a large number of different markets, including Monaco.
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What are the tax implications of buying a property in Monaco?
For residents of Monaco, there are no property or capital gains tax liabilities applicable on the buying or selling of property in the country. Nor are there any inheritance tax implications.
If, however, your intention is to retain a residency in the UK for tax purposes you will be subject to UK tax regulations related to the sale of a property overseas along with income tax liability resulting from any rental income you receive.
What professional assistance will I need?
It is always advisable to seek independent legal advice separate from any entity involved with your property purchase in Monaco or mortgage provider. Any lawyer you choose needs to be bilingual and conversant in international property law.
If you opt for a UK legal practise, ensure they are registered with the UK Law Society and have experience in international property transactions and conveyancing.
If you are a British national but are resident in a different country, it’s also important to understand the tax implications which may be incurred if or when you return to the UK. HMRC have produced a detailed guide for UK nationals living overseas.
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Speak to an expert on Monaco mortgages
Buying a property overseas is rarely as straightforward as in the UK. Lots of people in your situation seek professional advice to assist them through what can sometimes prove to be a convoluted process.
If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry.