Don't Count on Leverage

In much of the rest of the world, it is not possible for a foreign buyer to borrow money locally for the purchase of real estate, period. No bank will lend to you. In places where it is possible for a foreigner to borrow to buy, you won't find the terms as appealing as they can be stateside. In the final years of the real estate bubble in Ireland, banks in that country were offering 110 percent loan-to-value (LTV) financing. The extra 10 percent was to cover stamp duty (a tax charged of the buyer at the time of purchase in Ireland) and other closing costs. This very aggressive approach to mortgage lending was one of the factors contributing to the collapse of Ireland's banking industry. It goes without saying that you can't borrow 110 percent of the purchase price of a piece of property in Ireland today. In the current global climate, I don't know any bank in any country offering 110 percent LTV financing (although some banks in Spain will lend you 100 percent and maybe even 110 percent as a resident). Your financing options as a foreign buyer today are limited. Mortgage industries, in countries where they exist, are less sophisticated and less competitive than in the United States, meaning fewer products and less room for bargaining on the part of the borrower. In the wake of what the real estate investment world has witnessed over the past half-dozen years, they are also very conservative.

Specifically, outside the United States, fixed-rate mortgages ...

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