THE WALL STREET JOURNAL. Friday, November 8, 2019 |M5
mortgage. She got a 20-year-term
insurance policy with premiums
of about €107 ($119) a month.
Even Americans who know Eu-
ropean customs can be jolted by
the system.
Anthony Scotti, a New Yorker,
has lived in Spain with his wife
and children for 14 years and
owns Perfect Spain, a real-estate
brokerage and relocation adviser.
But he got a surprise when he re-
searched a loan for an investment
property in Valencia.
“I was 54 at the time, but they
told me the longest term I could
get was 19 years,” said Mr. Scotti,
now 55. “Apparently, after that I
would be too old!”
It is illegal to discriminate on
the basis of age in the U.S. mort-
gage market, but it is both legal
and common practice in Europe.
Lenders often require that mort-
gage terms end before a borrower
turn 70 to 80 years old, brokers
said. Mr. Scotti declined the offer.have been collecting rent for
years on a residential property—
is unlikely to count toward in-
come, Mr. Conn said.
Small blips on a credit report
are also a big turnoff to European
lenders, he added: “If you
bounced a check five years ago,
you will have a problem in
France.”
Americans can also forget
about speedy closings. Getting a
loan is typically a three-month
process, said Kathryn Brown, di-
rector of operations for Paris
Property Group, a brokerage spe-
cializing in foreign buyers.
Another peculiarity of the
French system, by American stan-
dards, is that getting a mortgage
in that country requires that bor-
rowers take out a life-insurance
policy and name the lender as the
beneficiary.
Mr. de Monclin said he recently
arranged a policy for a New York
woman on a €540,000 ($598,000)foreigners can’t borrow more than
60% of the purchase price, he said.
Seventy percent is also a common
cutoff, Mr. Corsi said.
Closing costs are also much
higher in Europe than in the U.S.,
and they have to be paid in cash.
Taxes and fees in Spain add 9% to
13% on top of a property’s price,
while in France, mortgage bro-
kers cited a range of between 7%
and 12%, depending on the re-
gion. In Italy, it is 9% of the as-
sessed value for resales, and 10%
of the purchase price for new
homes, said Mr. Corsi. Annual
property tax is generally lower
than in the U.S.
European lenders are generally
more conservative than American
lenders, said Mr. Conn. In many
European countries, “30% to 35%
of your net income after tax has
to cover all your existing debt, in-
cluding the one you’re about to
take on,” he said.
Rental income—even if youJUMBO JUNGLE|KATY MCLAUGHLIN
While European rates might
seem like a pipe dream stateside,
Americans in a position to buy va-
cation homes in Europe are able
to access something close to
them. European brokers who spe-
cialize in mortgages for nonresi-
dents say that in recent years,
more Americans are taking out
loans to buy pieds-à-terre in Paris
or Barcelona, beach houses on the
French Riviera and Spanish
coasts, or Italian farmhouses.
Amaury de Monclin, founder of
Bluesky Finance, a Paris-based
mortgage broker for foreigners
buying in France, said he has re-
cently secured American clients
20-year fixed-rate loans for be-
tween 1.35% and 1.9% interest. In
Spain, Kevin Monger, co-founder
of Mortgage Direct, a Valencia-
based broker, said he has recently
found American buyers 20- to 25-
year loans with a 1.75% fixed rate.
In Italy, Alessandro Corsi, manag-
ing director of Top Italian Mort-
gage, said his American clients
are getting 20-year fixed loans for
2.5% to 2.7%.
“You see people who would
have been cash buyers five or 10
years ago who now look at lever-
aging themselves,” said Mr. de
Monclin. About half of his bor-
rowers are U.S.-based, he said.
The most typical such customer is
an empty-nester couple in their
50s and 60s buying a Parisian
apartment just north of €1 million
($1.1 million), he said.
The low rates are the ecstasy
part of the equation; there is also
some agony, or at least practices in
each European mortgage market
that may come as a surprise to
American borrowers. First, lots of
cash is required: In Spain, foreign-
ers can rarely borrow over 70%,
said Simon Conn, an overseas prop-
erty and finance specialist based in
Shoreham by Sea, England. In Italy,W
ith U.S. mortgage
rates near historic
lows, American buy-
ers can be forgiven
for thinking this is as good as it
gets. But the mortgage rates in
other parts of the world, includ-
ing many European nations, make
U.S. rates look downright usuri-
ous. The European Central Bank
reported average rates in Septem-
ber for eurozone home-purchase
loans with fixed terms of over 10
years at 1.44%. In the U.S., the av-
erage rate in September for 15-
year mortgages was 3.12%; 30-
year loans averaged 3.61%,
according to Freddie Mac data.Mixed News on
Foreign Rates
ROB WILSONMANSION
A few basics for leveraging a
year in Provence or a place un-
der the Tuscan sun:1
American borrowers who
are nonresidents in Spain,
France, or Italy canfinance
between 60% and 80%of a
property, depending on the
country and the buyer’s quali-
fications.2
Closing costs—which can
represent anadditional 7%
to 13%of the purchase price,
depending on the country and
region—must be paid in cash.3
Ageism is legal in the Eu-
ropean mortgage market.
Banks in France begin gradu-
ally applyingless of a bor-
rower’s income to the debt-
to-income ratio at 55,said Mr.
de Monclin. Lenders in Spain,
France and Italy all have their
own cut-off ages—usually be-
tween 70 and 80 years old—by
which point a mortgage term
must end.EURO LOANS
GREAT RATES
Some of the
best deals
brokers have
seen for
nonresident
buyers:France1.4%
20-year fixed
65% loan to
value
Lender:
Bluesky Finance
—
Spain1.75%
20-to25-year
fixed, 70% loan
to value
Lender:
Mortgage Direct
—
Italy2.5%-
2.7%
20-year fixed,
60% loan to
value
Lender: Top Italian
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