Pay later with a Euro home loan

PLANS for a single European mortgage market could allow borrowers to default on home loans for six years before they faced repossession.

They would simply need an Italian mortgage, regulated by Italian law. But that will soon be possible if the Commission adopts radical plans to remove the barriers to a Continent-wide mortgage market outlined by an advisory group.

House buyers would be able to choose not only to borrow from lenders in other EU states, but to select which of the 25 or more legal systems would be used in the mortgage contract.

But the lenders would have to agree to the specified legal system, and they may be keener to see their mortgages regulated by the laws of Finland, where repossession and sale is completed in a brisk two to three months.

The suggestions that European mortgage contracts should be 'based upon the principle of free choice' was a little-noticed proposal in a 48-point plan of action from the Commission's Forum Group on Mortgage Credit, containing representatives of banks, other lenders and consumers.

EU Internal Market Commissioner Charlie McCreevy has pledged that he will act on the basis of the forum's proposals to bring about a single European 'mortgage area'.