Local Money

International Living Postcards--Saturday Edition

Saturday, Sept. 16, 2006

Opportunities for financing your real estate purchase outside the States are worth noting. Generally speaking, it's not possible to borrow money locally in Latin America or the Caribbean to finance your buy. Notable exceptions are Panama and, on a more limited basis, Mexico. The foreign lending industry in Panama is relatively developed and sophisticated; that in Mexico is emerging. Outside these two countries, though, your only options are to bring the capital you require from home (by taking out a second mortgage, for example, on U.S. real estate) or to hope the developer might be interested in carrying back some of the cost.

The story is very different in Western Europe, where it's increasingly straightforward for a foreign buyer to borrow money in the country where he hopes to invest. We've borrowed to buy in Ireland, France, and the UK…all (more or less) painlessly. Outside developed Europe, though, again, the options are more limited. That's why, when a friend mentioned she'd heard of someone lending money to foreigners interested in buying property in Croatia…she had my full attention.

I've been researching mortgage possibilities in this country for six months. No lead to date had panned out. This one, though, has: Hypo Alpe Adria Bank, which is offering financing in euro up to 70% loan to value of the purchase price (so, you've got to put 30% down). You can borrow for up to 20 years at a starting annual 7.75% interest rate. This is variable, as is typical in Europe, and not overly high for an emerging market like this one.

The catch is that the property must be purchased in a Croatian corporation. Our contact in the country, Croatian Sun, can tell you more. Get in touch at Croatia@InternationalLiving.com.

Lief Simon
Real Estate Editor, International Living

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P.S. Interesting to me personally is the fact that this group is offering to lend money to foreign buyers not only for the purchase of real estate…but also for the renovation of a piece of property. Kathie and I, as I've reported, bought a tumbledown stone farmhouse in Istria last spring. We paid cash for the purchase…but would appreciate the opportunity to finance at least part of the cost of the renovation. Hypo Alpe Adria Bank is offering to lend up to 400 euro per square meter for remodeling or reconstruction. You may be interested in this option, too.

P.P.S. You could speak with Iva from Croatian Sun in person regarding these mortgage options…as well as all aspects of current opportunity in this country, which we've identified as offering the best lifestyle buy in Europe right now…at our next Live and Prosper in Croatia Conference, scheduled for Oct. 11-13 in Zagreb. I'll be there, too, along with our other top experts in this fast-developing market. Click here for full details.