Properties
in Cyprus - A better deal with a foreign mortgage?
An article in a popular
UK newspaper at the end on 2004 suggested that
British buyers could save large sums
of money, not only on properties in Cyprus but
the rest of Europe also, if the system of shopping
around the Europe Union in search of a cheaper
mortgage were to be simplified.
This article refers to
a report by the Forum Group on mortgage credit
which was commissioned by the European government
to assess mortgage brokers, consumer protection
and laws relating to cross-border home loan provision.
This is of interest for prospective buyers of properties in Cyprus, or indeed
any other European country.
The report makes a point
of the fact that interest rates in some other
European member states are up to two percent lower
than the UK base rate.
These lower rates could amount to big savings
each month for property buyers with a Euro-mortgage.
It is a statistical fact that only about one percent
of European home owners hold a mortgage in another
EU country.
Factors contributing to
this surprisingly low number include legal differences,
language barriers varying standards of consumer
protection and the constant fear of exchange rate
fluctuations.
Policy proposals aimed at greater freedom for
homebuyers to take advantage of foreign mortgages
by the end of this decade are being put forward
by Charlie McCreevy, Ireland’s commissioner
in charge of the single European market.
|
Shopping
for cheaper mortgages around the European Union
Mr McCreevy states that: "A mortgage
is the biggest purchase most consumers make so we
must not shrink from the challenge of creating a
true single market for home loans.
"
An efficient single market could mean cheaper
and better loans for all Europeans, whether or
not they obtain their mortgage abroad."
According to the report, it is suggested
that the home loans sector across the European Union
should be updated to remove the potential pitfalls
of borrowing in a foreign country, as this would
greatly increase consumer choice as well opening
up the market for lenders across Europe.
This calls for European legislation to bring national
laws concerning early repayment penalties and the
calculation of interest rates into line across the
EU.
Although British overseas property buyers
are responsible for substantial price rises in properties
in Cyprus, France, Portugal and Spain, most of these
still use familiar British high street lenders to
fund their purchases.
The Forum Group report makes forty eight
recommendations to bolster consumer confidence in
order to encourage customers to find the most favourable
mortgage deal anywhere in the European Union without
being tripped up by foreign rules and regulations.
It furthermore states that applicable laws covering
mortgage deeds and related security arrangements
should be governed by the laws of the country in
which the property is situated. |
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