How to Obtain a Mortgage for Your Property in Cyprus
The government is looking for ways to boost foreign investment in the country. They are offering a new program that allows non-residents to apply for mortgages in Cyprus.
To become eligible, you do not even need a residence permit. Cyprus has a number of different mortgage programs with similar terms. Nonetheless, they do have some unique traits that make them stand out. There are many ways to get into real estate in Cyprus without a massive deposit. It’s worth reading this article before making any decisions about investing or buying property in Cyprus.
Characteristics of mortgage in Cyprus
To get a mortgage, you need to speak with the appropriate authorities of the Republic of Cyprus. The mortgage process in Cyprus can get long. However, it becomes only a formality if the applicant does not have problems with law enforcement.
You can even get a mortgage before getting permission from the authorities. You just need some assistance from your developer. There are two important advantages:
1. Buying an unfinished construction project in Cyprus is a great way to get your foot on the property ladder. You can opt for deferred mortgage payments. It will save you money each month.
2. The developer acts as an insurance policy for the Bank of Cyprus in mortgage issues. The developer is interested in accelerating the mortgage approval process. That way they can move on to selling their property.
The Cyprus government has a policy of granting multiple incentives to attract foreign investment. Foreigners get up-to 70% of their mortgage costs compensated through loans. The chances of getting approval for your mortgage increase significantly if you make 50% advance payment instead of just 30%.
How to obtain a mortgage in Cyprus
It is important to know the nuances of lending within this country before making your decision. With this guide, you will be able to make an informed decision about your chances.
1. Mortgage range
Maximum mortgages for residents of Russia tend to fall between 300,000 and 500,000 Euro. You can get it in Euro, Cypriot currency, or US Dollars. Your monthly mortgage amount is equivalent to the number of payments you make.
The mortgage term can be between 10 and 40 years. When calculating the mortgage term, much attention is paid to a borrower’s age. You can’t be older than 65. Still, you can save some money on your loan by prepaying it early. Furthermore, you can get out of this contract before the agreed-upon repayment schedule with early termination fees.
2. Interest rate
People who purchase property in Cyprus benefit from mortgages at floating interest rates. The rate varies, it can range anywhere from 4% to 5%. Cyprus has recently decreased mortgage interest for citizens of Russia and other countries.
The ratio of your debts to income should not exceed 30%. You can choose to pay on a monthly or quarterly basis. The mortgage amount and term will determine the settlement plan.
3. Application deadline
If you are a citizen of Russia, it’s not easy to get bank loans in Cyprus. The process involves submitting all necessary documents and waiting 30-60 days for approval.
Additional expenses
You might think that buying a home in Cyprus is an easy process, but it has its challenges. One of these obstacles is stamp duty and paying for real estate valuation services. The borrower covers these expenses.
The Cypriot mortgage process comes with several other expenses. The bank will charge you 1% commission for granting the loan. This can be expensive if it’s a large amount or a long-term commitment.
Life insurance can start as low as 500 Euro per year or be up to about 1000 Euro annually. As you make your monthly mortgage payments, the amount of life and health coverage that you need to pay will decrease.
Remember to consider the cost of processing your documents. It can range anywhere between 100 and 150 euros.
Documents required for mortgage approval in Cyprus
The documents that you will need are similar to those requested by most banks around the world.
To apply for a mortgage in Cyprus, you need to provide the following documents:
1. You must submit an application form.
2. You need to have a valid passport if you are not a Cyprus resident (submit a copy).
3. Submit a copy of your residence permit if you are a Cyprus resident.
4. Submit a certificate of income from the last 3 months.
5. Bank account statement. The reporting period is 6 months (if the borrower has no other loans).
6. The contract for the sale of real estate in Cyprus. It should be signed and registered with the local Department of Lands & Surveys.
7. Original documents that prove you own your real estate abroad.
8. You are required to submit a tax return for the last reporting period.
You will be able to confirm the solvency and identity by submitting these documents. That way, your mortgage will be approved faster. Depending on the status of your borrower, you may need to provide additional documents.
In Cyprus, banks often require entrepreneurs to provide social insurance. The documents that a legal entity needs to submit are also quite different to the ones for an individual person.
Conclusion: Team up with real estate experts
The incentives offered by the Cypriot government are unprecedented. They offer up-to 70% mortgage financing for foreigners. House buyers and sellers should contact the experts to make sure they get their dream home. These experts work as your guarantee for obtaining a mortgage. They also provide legal assistance in resolving any issues that may arise with migration. We hope this article helped you get a clear picture of the real estate situation in Cyprus. The final decision is entirely up to you.
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