Financing Morocco Property
There are many finance and mortgage options available to those who would like to buy a new home in the sun and financing property in Morocco is now relatively common.
Refinancing your home
Generally, the primary source of finance for British homeowners will be the release of capital from their own home. Say for example, you purchased your home in 1998 for £125,000, and have been paying off a £100,000 mortgage every month for the last 9 years. The outstanding debt on the property will be around £75,000, but over this time, your property could now have doubled in value to £250,000. So you have a £250,000 property with a £75,000 loan – that is only 30% of the value. Mortgage lenders will usually offer up to 80% loans without too much difficulty. 80% of £250,000 is £200,000, so you could easily borrow an extra £125,000 for financing your property in Morocco. Off course, you will find that your mortgage bill is not much greater that what you had been getting used to, but remortgaging your own home is generally one of the cheapest ways to raise finance for property investment.
Morocco Mortgage
It is possible to obtain a mortgage for a property in morocco. However, the mortgage market in Morocco, like the property market, is still emerging. So there is not the same array of financing options available as you would expect to see in the UK. It is rare to see anything other than a repayment mortgage (i.e. interest only mortgages are hard come by!). Bear in mind however that the competition in the mortgage market is hotting up, so it may not be long before we start to see a wider array of options become available for investors interested in financing property in Morocco. Using a Moroccan lender has advantages and disadvantages.
On the positive side the lender can quickly assess how much the property being bought is truly worth, they can easily conduct their own surveys and searches on the land, property and even the developers. An added bonus is that there will be no additional costs incurred by the borrower in transferring money abroad. On the down side interest rates in Morocco can be high (although with the recent hikes in the UK interest rates, this financing option may become more viable!). Lender’s fees can be higher and the loan to value ratio may be more restrictive meaning a purchaser has to find a larger deposit and finally there can be language and cultural barriers and hurdles to deal with.
Moroccan lenders will typically finance up to 70% of the value of the property. So for example, it the property costs £120,000 you could potentially finance it with a £90,000 mortgage from a Moroccan bank, and you would be required then to find the remaining £30,000 as a cash deposit.
