More than two million Britons own a home abroad, and more and more of us dream of jumping on the same bandwagon. But what’s involved?

How do I find a home abroad?

Most people spot something while they are on holiday. Otherwise, several magazines list foreign properties for sale, including Exchange & Mart, Homes Overseas and Foreign Property News, and there are hundreds of websites offering overseas sales.

I’m really keen to proceed…

It’s time for a reality check. Half drunk on sun and sangria and on a break from the office, almost anywhere can seem appealing.

Ask yourself these questions:

• What is this house like in winter?
• What happens to the local area in the off season?
• Do I want to go to the same place every year?
• Are you prepared to spend your holidays organising foreign builders, roping in friends and doing the hard graft yourself?
• Have you considered the cost of getting to your holiday home? Cheap flights have opened up large parts of Europe to British buyers, but don’t assume that those routes will be there forever of or that prices will stay low.

Don’t assume your house will rise in value. This is a peculiar British obsession. If you are buying thinking you can sell at a profit later, you could be disappointed. It may make more financial sense to rent.

How do I raise the money?

If you can buy with cash, do it. You will own the property outright without increasing your mortgage debt. This will mean fewer bills. If you don't have the cash, there are two ways to pay for a foreign home. You can extend your main mortgage, or you can get a new mortgage for the property. Extending your mortgage is presently a cheap way of raising cash, but you may not be able to get a remortgage for more than 75% of the property's price. But remember, you risk losing both homes if you cannot keep up payments. The other option is to take out a second mortgage on your holiday home. Several High Street companies offer mortgages overseas, including Abbey National and Barclays. Conti Financial services in East Sussex is one of many companies that can arrange mortgages for homes abroad. You often have to have at least 10% of the price in cash.

Can I get a mortgage in the local currency?

Yes, but you need to be aware of all the risks. Taking out a foreign currency mortgage could be dangerous. You are exposed to currency fluctuations: the pound can move against the euro or the dollar - if it weakens, your payments will increase. On the other hand if you are buying property in another country your home will be valued in that currency so it could make more sense to borrow in that currency.

How long will it take to complete?

It depends on the country you are buying in. Buy property in France and it could take up to 20 weeks to complete the transaction. In Spain, Italy, Greece and Portugal it will average between 12 to 18 weeks. Be aware the longer it takes to complete the transaction the more at risk you are from rate fluctuations, which could add thousands to the real cost of the property in the time it takes to complete.

I don't speak the language…

You will need a reputable solicitor and valuer who is local. Your bank or mortgage lender should be able to help you find these professionals who also speak English. The Federation of Overseas Property Developers, Agents and Consultants has a list of lawyers who specialise in buying abroad. Beware that in some countries lawyers act for you and the seller, so make sure you're getting independent advice. Talk to a British lawyer before you sign anything, and remember, you often cannot pull out of an agreed offer as you can in England and Wales.

Are there any hidden costs?

Almost certainly. Britain has some of the cheapest home-buying costs in Europe. For example, French legal fees are high - ranging between 10% and 18% of the house price. There is also a regional tax and an occupancy tax if you live there more than eight months a year. In Spain, valuation costs £100, and loans must be signed by the public notary. This costs £580 on a £45,000 mortgage. Taxes and legal fees will normally amount to at least 10% of the property value.

What about day to day running costs?

The buying process is the not the end of the expense. Check carefully what local taxes you must pay, and be aware that in many blocks of flats you have to pay a service charge. You'll need to open a local bank account, as services such as water and electricity may only connect you if you sign a direct debit. Local bills must be paid in local currency - this costs money to buy and in some cases foreign banks charge extra for transactions.

Are there tax implications?

Yes. If you rent out your property abroad income will have to be declared to the British taxman. Check out the tax laws of the country you're buying in. There may be implications if you rent or sell the house. Many countries have reciprocal tax agreements with the UK so that you don't end up paying tax twice. You also need to make a will, as local inheritance tax laws may also come into play. Most of Europe is governed by Napoleonic law, which means that your children and spouse will be entitled to a share of your estate. This can create inheritance tax problems in the UK, where only assets left to a spouse are exempt from IHT. Get good advice.

How do I insure my home?

Ask your own home insurer if they offer a deal to insure a property abroad.