How do mortgages in other countries work? From Germany, to France, Russia and the US, we take a look

  • In France, school fees are excluded when an applicant's outgoings are examined

  • Around 50% of the property's value is needed for a deposit in South Africa

  • Russian buyers can choose to pay their mortgage in one of three currencies

Britons' fixation with home ownership is well known, and millions of people up and down the country have trodden a well-worn path when it comes to saving up for a deposit and getting a mortgage.


But would-be buyers around the world face different rules and regulations when it comes to mortgages. And, of course, in some countries, renting rather than home ownership remains the norm.


According to the Statista Global Consumer Survey last year, Switzerland and Germany are firmly rental societies, with many residents not owning their own homes.



But, it is a different story in China and Russia, where property ownership is very much the norm, according to Statista.


Experts at Online Mortgage Advisor have rounded up some of the key details about how mortgages work in different countries.


The most pertinent points are covered, but, as ever, anyone wanting to take the plunge and buy a home in another country will need to do their own research and take professional legal advice.


Canada

According to the research, the typical mortgage term for properties in Canada is five years, and the maximum term is 10 years.


But interest rates are fairly low, hovering at around the 2.49 per cent mark at present.


At the end of the period, the mortgage terms are then renegotiated.


France

In France, the general rule of thumb is that a buyer can borrow five times their individual or combined income for a repayment mortgage, and when it comes to interest-only mortgages, up to 10 times their income.


But, borrowers must have net assets outside their main residence which are at least equal to the value of any interest-only mortgage.


For example, if a buyer wants to borrow €1million through an interest-only mortgage, they will need to have at least that amount stored away somewhere, the research suggests.


The debt-to-income ratio is another important factor when it comes to getting a mortgage and buying a home in France.


Online Mortgage Advisor said: 'Banks will look to see if your existing monthly payments for loans and mortgages exceed one third of your gross monthly income.'


However, one outgoing that French banks do not take into consideration is school fees.


So, if you have two children in private education, the term fees for the school will not be reviewed in your outgoings during the mortgage approval process.





Germany

When applying for a mortgage in Germany, banks will investigate an applicant's financial situation thoroughly.


Part of the process is to obtain a 'Shufa' report, which is the equivalent of a credit report here in the UK.


The most common type of mortgage within Germany is a fixed interest loan.


This is where the borrower can set the terms for the rate of the balance repayment - usually paying between one to 10 per cent of the amount over the term of the loan.


They can also decide whether to make additional 'principal-only' balance repayments, up to 10 per cent of the outstanding amount.


However, for those wanting to buy a property to rent out, or for those looking for a buy-to-let property, interest-only mortgages are more favoured, the findings claim.


During the term of the loan, only the interest proportion is paid and the balance is due in full at the completion of the loan term. It is possible for German residents to deduct the interest payments from their annual income taxes.


Russia

The mortgage industry in Russia is still relatively young, so there are many variations depending on the bank or mortgage lender a prospective buyer is dealing with.

Currently, the Government is looking to boost the Russian property market by offering mortgage rate incentives for prospective buyers.


A big difference with Russian mortgages is that you have the freedom as the borrower to choose which denominating currency to use: you can opt for Russian Rubles, US dollars or Euros.


Therefore, the 'felt cost' of the mortgage is based on the prevailing foreign exchange rate and the currency in which you earn your income.


Therefore, as an initial step in applying for a mortgage in Russia, try to ensure you have at least a passing familiarity with foreign exchange rates.


Borrowers in Russia tend to have a consultation with their lender to decide the terms appropriate to their situation, rather than fitting into a particular product.


Singapore