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Mortgages delay overseas property purchases by 1 month

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Buying with mortgage makes an overseas real estate transaction 33 days longer on average, say real estate experts from Tranio after a 2015 survey of 292 real estate agencies and developers in 37 countries on Russian-speaking property buyers abroad.

Country Transaction registration time, months Time difference,
without mortgage with mortgage
Spain 4.5 5.2 21
France 6.1 6.9 24
UK 6.7 7.7 30
USA 4.5 5.5 30
Italy 4.3 5.4 33
Germany 4.4 5.6 36
Austria 6.0 7.6 48
Average 5.2 6.3 33

Buying a property outright with no financing takes just 5 months on average in the most popular destinations, those who require a mortgage from the bank will spend one month more to conclude the sale.

No lending system is equal

Germany and Austria stand out from the group, where it takes 36 and 48 days on average respectively. This extended duration however, maybe due to the fact that Russian-speaking buyers see Austria and Germany as excellent commercial real estate destinations due to the economic and political stability within their borders (rather than yields which are suppressed). The registration process for commercial property is longer than for residential which may explain this disparity.

In Spain, on the other hand, a mortgage only extends the buying process by 21 days in fact. In a recent article, Tranio noted a rising and strong attraction for Spanish commercial real estate, which survey respondents say is due to easy access to financing, made more attractive by low interest rates.

Mortgage registration in Italy extends transaction time up to 33 days, where it is generally difficult for foreign citizens to obtain a loan. The country also has a reputation for extensive bureaucracy.

Yet, in France where both foreigners and locals may struggle to obtain financing, it only takes 24 days. Nevertheless, France is known for having one of the most secure bank lending systems in the world, which no doubt speeds up the process once approval is given.

Interestingly, getting financing in the USA and UK, which are the only two English-speaking countries in the ranking, extends the transaction by process by 30 days on average. Low interest rates are making lending an attractive leveraging option, but buyers should expect both countries to increase the interest rate in the near future.

Spend less time on buying with a loan

The value of the mortgage also matters according to the Tranio survey: if a buyer finances up to 40% of the property value, the average transaction time is 5.2 months — the same time as without financing. However, if over 40–60% of the amount is raised from the bank, the transaction will take over 6 months.

Tranio recommendations to speed up the transaction:

  • collect all documents for the loan application well in advance and get them translated into the local language. A local broker can provide a list.
  • apply for mortgage pre-approval when possible (available in the US) so you don’t lose out to another buyer if there are multiple bids on a home.
  • ask the bank(s) for a list of approved property valuation companies and choose the one with smaller work load if an appraisal is required.

Tranio is an international property broker with a dedicated team of market experts. Their experienced team can advise on all mortgage and financing questions when it comes to purchasing overseas property. An extensive network of foreign property partners help clients to accelerate the financing process and reduce unwanted delays.

Yulia Gushchina and Daria Berezina, Tranio

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Interested in the Russian Buyer Activity Report 2015? Contact bianca@tranio.com to receive the full report direct to your inbox.

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    Marina Filichkina
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    Head of Sales
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