Family OfficeFinanceInsuranceMortgageA new frontier in global real estate financing

8 April 20240

For many buyers wishing to purchase property abroad, securing financing across borders has long been a complicated and frustrating task. Strict national and international lending regulations make it extremely difficult, if not impossible, for non-residents to obtain a mortgage in another country. Even high net worth individuals often face obstacles when trying to leverage their wealth to invest in real estate abroad.

However, a potentially revolutionary solution could be on the horizon, in the form of a new type of non-bank private lending institutions that focus exclusively on providing access to credit to international real estate investors and buyers. Unencumbered by the constraints of traditional banks, these innovative financing companies could open up a new frontier of opportunities.

The vision: A borderless lending model

The basic concept is simple but powerful: create a private, non-bank lending company that can operate in any country globally, respecting local and international regulations. By structuring the business as two interconnected entities – an investment fund to pool capital and a separate credit origination and servicing arm – this model could make cross-border real estate investment exponentially easier and more efficient.

Today there are immense inefficiencies and regional barriers when it comes to financing international real estate purchases. Buyers in one country have no way to secure mortgages or access to credit in another country. We are proposing a truly global lending society, where financial capacity is not limited by national borders.

Unlocking new investment possibilities

The value proposition speaks for itself: by removing geographical barriers to lending, the company unleashes a flood of new investment possibilities. Affluent individuals and families could seamlessly purchase holiday homes, investment properties or relocate internationally, taking advantage of competitive credit solutions tailored to their needs.

Would-be expatriates would no longer have to submit to the inflexible policies and strict borrowing requirements of local banks. They will no longer have to contend with foreign currency constraints or excessively high interest rates imposed on non-resident borrowers. Operating as a centralised global platform, prices could be much more attractive and adapted to individual risk profiles.

Today’s investors have incredibly diversified holdings in multiple countries and currencies. An internationalised credit platform that meets these needs for borderless liquidity is extremely attractive. It allows buyers to treat their global assets as a single balanced portfolio when borrowing.

For example, a US-based investor could leverage its domestic holdings and income streams to finance a vineyard estate in Tuscany or a pied-à-terre in Paris through the global loan facility. An Indian industrialist could leverage the platform to buy a country villa in the UK for his children attending university abroad. The possibilities are unlimited when the geographical shackles are removed.

The new speed of global lending

In addition to expanding access, this cutting-edge financing model promises to dramatically speed up and simplify the entire loan origination process thanks to built-in fintech automation. Traditional international mortgages can take months of gruelling back-and-forth between banks, borrowers, appraisers, currency traders, legal experts and more in different countries.

Using tools such as artificial intelligence, blockchain and quantum computers, new non-bank lending companies that help take loans from different countries make it easier and faster. Today, it takes several days or weeks to approve a loan. Thanks to these advanced technologies, processes such as contract signing, risk assessment, identity check, asset search, appraisals and more can be done easier and faster.

We are talking about going from six months to six hours for international mortgage approvals. Today’s technologies can make this a reality.

Whereas today the global mortgage process is fragmented in a quagmire of banks, lawyers, currency brokers and other intermediaries, everything could be unified and synchronised through this new global lending company. From documentation to underwriting to loan disbursement, the whole experience becomes fluid and fast.

The power of private capital

Of course, the creation of such a revolutionary international lending institution is no mean feat. It is necessary to raise and pool investor capital to feed the platform’s global credit fund, which serves as a source of financing in multiple countries. According to estimates, the initial target is several tens of billions in order to have a significant capital base to draw on.

Early backers could include some of the world’s largest asset managers, private equity firms, sovereign wealth funds, and top-tier family offices. They clearly see the value of exclusive access to credit for the global elite and their real estate ambitions.

There is a significant opportunity gap that existing banks and lending institutions cannot fill for cross-border property buyers. In today’s era of borderless capital, a truly internationalised non-bank credit society makes sense.

A glimpse into the future

Although still in its formative stage, the internationalised private lending model may soon take shape with a group of lenders and development partners in Europe, the Middle East, the US and Canada. The inspiration came from the founders’ decades of experience in managing high-level real estate and financial assets globally.

We have seen the immense frustrations and lack of access to credit that plague wealthy buyers purchasing homes abroad. This would solve a need that has existed for too long.

If successful, the borderless lending institution could have a widespread impact in redirecting global capital flows into real estate. It could stimulate more investment in hitherto underserved international markets. Above all, it strives to provide a long-awaited financial experience worthy of the prestige and wealth of the global elite.

For those fortunate enough to be able to afford international property, access to attractive financing options should no longer require them to jump through hoops or settle for second-rate local loans. The democratisation of borderless real estate capital may finally be coming thanks to new technologies and brave new credit pioneers.

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