Montenegro Girl x
How I was able to buy a property abroad for under 50k
How did you manage to buy a property abroad??” This is a question I am pretty sure a lot of people would ask me whenever I mention I have an apartment in Montenegro. But it’s “not polite to ask such things” here in England – so I rarely am. But I know I am absolutely fascinated by the cost of things and how other people manage to do things. So in case you’re that kind of person too (ie nosy) and (as it’s just you and me) I’ll tell you how I managed to buy my very own property abroad for under 50k.
You don’t have to be rich to buy a property abroad
In 2005 I bought a run-down apartment in beautiful Kotor Old Town in Montenegro. I was in my thirties, single and worked as a self-employed consultant with a fluctuating and fairly modest income.
As a consultant my hourly rate was pretty good, but the work was usually part-time due to the nature of the job and I often had gaps between contracts (the longest being 4 months).
This was often just the way the contracts worked out, but they were gaps I cherished and planned for, so I could do some travelling or more often than not, carry out a property project. As a result, though my annual take home pay at the time was decent but fairly modest around £22k per year.
To some buying a property abroad (let alone in Montenegro) seemed a very risky thing to do. Reactions like these do make you question your plans or decisions.
The plan to fund a property abroad for under 50k
My plan was to raise some money by taking out extra borrowing on my house, a modest, 2 bedroom terraced house worth about £115k. As I had renovated my house from top to bottom the previous year, I had added value onto my house plus the market was rising.
So, this enabled me to borrow a maximum of £37k at the same interest rate as my existing mortgage of £60k. This was fixed for 4 years on an interest only basis.
To some buying a property abroad (let alone in Montenegro) seemed a very risky thing to do. Reactions like these do make you question your plans or decisions. They did for me too. But in a good way as it forced me to “test” what I was planning to do by going through my reasoning and plans in my head.
I am in fact financially very cautious and consider things very carefully. I knew I was not a rash person by nature and only committed to things that I had thoroughly thought through. The property was an investment for my future life – my “pension” pot.
To address the risk issue though, I asked myself what my worst-case scenario was. “What if I lost all the money I invested in the property?” Every single penny of it. (Which was probably unlikely, let’s be honest, although possible). If it all went belly up and I lost the lot, I’d just have a bigger mortgage (£97k). But I knew I would still be able to pay it. I wouldn’t be thrown out on the streets or bankrupt. I went through it all and I was comfortable with the risk.
My very own property abroad for under 50k
That spring and summer I spent lots of time hunched over my computer researching properties online, so I got a good feel for the prices. Then I borrowed as much extra money as I could on my mortgage (£37k), booked my 10-day trip for the property search and found a place through a local property agent.
In the end I also had to drain my cash savings and took out some of my ISA savings, as I spent £41k on the apartment and the renovations ended up costing £15k instead of the £10k I had initially anticipated.
13 years later I still own my apartment and although the value dipped during the credit crunch, it was never worth less than I paid for it and has now gone up in value somewhat. It’s edging in the right direction after the slump of the last 10 years or so, I’m pleased to say.
So, it is proven to be a good decision and a savvy investment.
In fact, it’s turned out to be not just an investment for my financial future, but an investment for my future self too.
And one I am planning to hold onto for the long run.
Montenegro Girl x
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