Features of obtaining a mortgage in Cyprus

When obtaining a mortgage for the purchase of real estate, there are no special differences in the requirements for Cypriot citizens and foreigners. But Cyprus banks divide borrowers into residents - this category includes Cypriots, Europeans and non-Europeans, but who have lived in the country for at least 5 years, and non-residents. The conditions for these categories of borrowers differ: for the first category, a minimum contribution of 20% of the value of the purchased property is required. The interest rate in this case will be about 2.5%. And for the second category, a contribution of 40% is required, and the interest rate in this case will be 4.5-5%. Mortgage loans are issued in euros for the period when the borrower reaches the age of 65. Cyprus banks issue mortgages in the amount of 60-70% of the cost of an apartment or house.

Conditions for obtaining a mortgage loan

The main condition for a Cyprus bank to provide a loan for the purchase of real estate is to prove that a person is solvent and able to pay loan contributions on time. If the monthly contribution on the loan is 1000 euros, then in this case the applicant must prove that his income is 1500-2000 euros per month. Such proof can be wages, dividends from commercial activities, renting an apartment, etc. Therefore, the bank should see that after paying the loan contribution, the applicant has money to live on.

Also an important condition for obtaining a mortgage loan is to have an amount in your account in the amount of at least 30-40% of the total cost of the object. The bank rate for a mortgage loan in Cyprus will average 3 - 3.5% in most cases. A mortgage loan is issued for any period, the main thing is that at the end of the loan payment, the applicant should not be more than 65 years old. Upon confirmation of solvency by the applicant, Cypriot banks willingly issue loans for new buildings and real estate from the developer, but with less enthusiasm they lend secondary real estate. In addition, loans for secondary real estate are issued based on the cadastral appraised value and its size as a percentage of the value of the property is much smaller, and is less than 50%.

Who gets a loan more often?

In Cyprus, it is easiest for Cypriots to get a loan, a completely different package of documents is required from citizens of the European Union or other countries. In any case, the main condition for issuing a loan should be an understanding by the bank that the applicant has a good income and is able to pay off the loan - then there will be no refusal. Cypriot banks have enough available funds and are interested in making these funds work, including through the provision of loans. Mortgages in the country are issued exclusively in euros.

For each client, the bank will decide to reduce the interest rate or apply the maximum. Preference is given to foreigners who permanently reside in Cyprus or work in Cypriot companies under an agreement, while the bank understands the income and the client's ability to repay the loan in the future. But before applying for a loan, realtors conduct a conversation with a potential applicant in order to understand the situation as much as possible about the possibility or absence of such.

Features for Russians

It is possible for Russian citizens to submit and sign all original documents, questionnaires and applications directly at the representative offices of the Bank of Cyprus in Moscow and St. Petersburg. To do this, it is necessary to contact companies that work in the Cyprus housing market, whose representatives will arrange a meeting of the applicant in one of the Russian representative offices of the Bank of Cyprus with an appointed manager.

Required documents for obtaining a loan

In order to receive a positive decision of the Cyprus bank for the loan, the applicant must provide the following documents:

• Passport;
• Internal passport;
• A letter of recommendation from the bank where the applicant is served in the country of residence;
• All movements on the account for the last 3 years;
• Tax returns for the last 3 years - both personal and companies in which the applicant is a founder;
• Copies of constituent documents for companies owned by the applicant;
• Copies of documents for the ownership of movable and immovable property and other documents confirming the applicant's solvency and income;

At the same time, if the applicant is married, it will be appropriate to additionally show the income of the spouse, since this can significantly increase the family welfare indicator. It is also necessary to write an application for a loan and fill out a questionnaire at the bank.

What kind of real estate is a loan issued for?

Banks issue mortgage loans for the purchase of primary housing from the developer and secondary, but in the second case it is necessary to have the Title of ownership of the property. If we are talking about individuals, the banks of Cyprus issue a mortgage loan most often for residential real estate. At the same time, it should be understood that the object is liquid, since an assessment will be carried out by the bank to determine the final amount of lending. Both EU and Russian citizens can get a loan, but on condition that customers show documents containing information about their solvency.

Terms of consideration of the application

As a rule, the procedure for the bank to consider an application for a loan is from two weeks to a month. But, if the applicant immediately provides the necessary package of documents with sufficient proof of his well-being and income, then this procedure will take only a few days. If the bank does not have enough documents provided, it can request any additional documents from the applicant. In this case, the term of consideration of the loan application may increase to 2 months or more.

Assistance of developers in obtaining a mortgage

Developers provide their property buyers with all possible assistance in obtaining a loan from Cypriot banks to purchase real estate. As a rule, real estate agencies and Developers take an active part in the communication of the borrower with the bank, starting from the recommendation to his bank and full support until the loan approval is received. There are companies that provide assistance in reviewing loan applications and remotely. This process is organized in such a way that the applicant can provide the necessary package of documents to the credit department by e-mail, and, with a positive decision, bring the original documents to Cyprus during a personal visit to the bank already upon receipt of the loan. Developers also provide assistance to Russian citizens in the correct preparation of a loan application and filling out a personal questionnaire.

Expenses

Upon receiving a positive response to a loan for the purchase of real estate, the applicant pays the bank 1% of the amount of the loan received (for example, 1% of the amount of 300,000 euros will amount to 3,000 euros). Also, you will have to pay 250 euros to a bank appraiser of real estate and insure your life in an insurance company. After full repayment of the loan, the insurance company returns to the applicant up to 70% of the insurance premiums paid. And the cost of insurance depends on the loan amount requested by the applicant and the term for which the loan will be issued. On average, it can fluctuate around 800-1000 euros per year.

Which banks issue mortgage loans in Cyprus

At the moment, all Cypriot banks are willing to issue mortgage loans, but subject to the borrower's compliance with all necessary requirements, these are the Bank of Cyprus and Hellenic Bank. Ifa Russian has the opportunity to get a credit line in Russia or in any European bank, then the seller's side can accept them, but often third-party banks do not accept an object for lending if they do not control it by territorial affiliation. When solving this issue, it is necessary to understand which of the options offers the most favorable conditions. At the moment, Cyprus has one of the lowest loan rates in Europe - from 2% per annum, it depends on the loan amount and its terms.

Now in Cyprus, the Bank of Cyprus is the most loyal to foreign buyers of real estate in terms of providing loans. In addition, it is the only bank in Cyprus, in all branches of which Russian-speaking employees work. In this connection, there is no need to translate the documents submitted for consideration into English or Greek and their apostilization. In addition to the process of their preparation, it is worth remembering that these are also additional costs, and not small.

Example of mortgage calculation

If you receive a loan of up to 200,000 euros, you can count on the purchase of real estate worth 330,000 - 350,000 euros. If the borrower is 40 years old, then he can get a loan for a period of 25 years, and his payments will be 700-800 euros per month. The purchased property can be rented for 1300-1500 euros; this amount will be enough for all loan repayments and even there will be extra.

A Russian citizen working in a Cyprus financial company with a salary of more than 5,000 euros per month receives preliminary approval for a mortgage on an object worth 460,000 euros. The client has a 35% down payment, the loan term, taking into account the age of the applicant, will be 15 years. The Bank has previously announced that in this case the loan rate will be only 2.2% per annum with the possibility of early repayment. The key point here is that the bank considers applications for lending only for real objects for which a preliminary purchase and sale agreement has been signed. Therefore, initially you need to decide on a real estate object, which can be both under construction and from the secondary market.

Thank you for your help in preparing the material:

Sergey Smolensky, CEO of the companyEmpire Property Cyprus

Olga Tutunara, Director of the company Fenix Properties LTD

Artem Spirin, Executive Director of the company 1st Property Broker Cyprus LTD