How do people outside the US pay for their homes?

[Throatwarbler_Mangrove]

In your particular case, I think it’s more because the term “forclosure” isn’t commonly used in British English. “Repossess” is the more commonly used term that means basically the same thing.
I made a couple of posts in past threads about this:

http://boards.straightdope.com/sdmb/showthread.php?t=493423&highlight=fixed+rate+mortgage

@me

It’s interesting to note that the concept of a “fixed rate mortgage”, where interest rates are fixed for the entire amortization period of 20+ years, is virtually unknown outside the United States - in a liberalized market, no bank or depository institution would survive the risk of loaning money at fixed rates for 20 years. They didn’t exist in the US either prior to the Great Depression. Such loans exist in the US almost entirely due to the American industrial policy of massive government intervention in the form of Fannie Mae and Freddie Mac.

@Throatwarbler_Mangrove

Here’s how(PDF) it works in the US.
Basically, banks are in a business of borrowing money at a lower interest rate and lending it at a higher interest rate. If the bank borrows primarily in the short term (as they do), then they cannot lend at primarily a long term, at least not at a much higher interest rate, as it would result in a duration mismatch on the balance sheets. Thus in most countries, e.g. Canada, an otherwise identical market, the maximum period that one can “fix” a mortgage rate is ~5 years, at a rate that will be higher than the current floating rate, and in American parlance the “ARM” is the only type of mortgage available.

Banks in America can offer “fixed rate” mortgages because they have access to a secondary market in mortgage backed securities, created by Fannie Mae and the federal government, and thus are shielded from the interest rate risk.

It’s sort of a bit more complicated than that in reality but that’s the gist of it.

I’m probably not 100% right on some of the specifics, not being an American and all, but I think it’s mostly right.

Other than that, it’s basically the same type of deal in other developed countries. In addition to the difference in interest rates, many other countries, especially poorer ones, don’t have the very advanced system of personal credit tracking which exists in the US and UK. Thus, “Alt-A” mortgages, which are primarily made on a person’s credit rating, would not exist. So if you want a mortgage, you need a downpayment relatively large compared to the US.

For example, GM recently introduced car financing in China, where one could finance the purchase of a car with only a modest down payment of 50% of the purchase price. By Chinese/third world standards, this is a pretty generous deal(It was at least 6 months ago that I heard this, so things might have changed even further since then).

That gives you an idea of the availability of consumer credit in other countries vis a vis the US and UK.