Below there is an article from thisismoney.co.uk that shows the extent of the 'holiday homes abroad' phenomenon.

(excerpt from thisismoney.co.uk)

MORE than a quarter of a million Britons own a foreign property. This number has risen by almost 50% in the past six years and continues to grow, thanks in part to the numerous television shows extolling the joys of having a holiday home.

This figure is expected to double in the next five years, according to Halifax Estate Agents. The most popular destinations for second homes abroad are Spain, France, Florida, Portugal and Italy. Others growing in popularity include Croatia, Turkey, Cyprus and Morocco, where people often expect to pick up a bargain.

But before you dive in head first, there are many issues to consider, especially if you plan on renting out the home. Although Europe has a single currency and many common laws, there are still massive differences in the tax and legal requirements when buying and renting your French castle or Spanish villa.

The key is to do your research. A good idea is to agree a loan in principle with the mortgage company for your main home to give you an idea of how much you can spend. Simon Conn, managing director of Conti Financial Services, a specialist in buying property abroad, says: 'Don't always get drawn to places on the basis of cheap flights. There's no guarantee the budget airline will always fly that route, which means rental potential will plummet.'

Because the majority of people take a mortgage secured on their UK home, the lender doesn't need a valuation on the holiday home. But Mr Conn warns: 'This is very dangerous. We constantly hear horror stories of people buying places without getting an independent valuation done and just trusting local developers. In some cases, the property has later been demolished as it breached planning rules.'

Splashing the cash

The easiest option is to raise capital on your existing UK home, providing you have enough equity built up in it. Your lender may want to revalue your home and will make a charge for this as well as charging for the further advance of money.

You will also be restricted to whatever mortgage deals your existing lender offers. However, if you do not have penalties on your existing mortgage, you could look around for a new deal and remortgage. Alternatively, you could opt for a foreign currency mortgage. A euro mortgage will normally be done with a bank or lender close to where you want to buy, though some UK banks and building societies have overseas operations. The overseas lender will do their own checks on the property to make sure the home is registered in the seller's name and that a proper legal title exists.

Euro mortgages tend to be cheaper. The interest rate for a sterling mortgage in Spain is about 6.25% compared with rates from 3.7% for a euro mortgage. The big High Street lenders Barclays, Halifax, Lloyds TSB and NatWest offer foreign currency mortgages. Whether this is right for you will depend on your personal circumstances.

Rob Clifford, at national broker MortgageForce, says: 'While a euro mortgage looks cheaper, it can be fraught with hassle as you are exposed to exchange rate movements which can make monthly costs higher than expected and make it difficult to budget. But a euro mortgage is a better option if you're renting the property out and being paid in euros, as the rental income can be offset against mortgage repayments.'

Picking up a bargain

Eastern Europe is growing in popularity with holiday makers and holiday home owners searching for a bargain. You can, for instance, pick up a two-bedroom property at a Black Sea resort for about £50,000. Properties in the mountains cost about £40,000.

A two-bedroom apartment on Croatia's Istrian Peninsula will cost you about £60,000 while a new-build villa could be £150,000 or more. But be warned that in some countries you can't buy land or property directly, so a limited company has to be set up to do this. Also, while properties are cheaper, there are risks associated.

Although tourism is growing, there is no guarantee this will continue, which affects rental potential. Eastern European countries also have less stable political climates so if a government changes and takes a dim view of foreigners buying its properties, your investment is at risk.

However, Andrew Hamilton, marketing manager at The 4Less Group, an overseas property mortgage specialist, says: 'The Bulgarian market is becoming increasingly more stable as they are set to join the EU in early 2007. Buyers can find a two-bedroom apartment for as little as £10,000 and the appeal of buying is likely to grow in the future.'

He adds: 'British buyers are becoming more adventurous and long-haul destinations such as Florida, South Africa, Canada, New Zealand and Australia form the next tier of our inquiries.'