Mortgage in Cyprus - How to obtain?
Mortgage
Cyprus banks offer quite loyal terms for obtaining a mortgage to property purchasers provided certain conditions are met. In recent years one of such conditions is that a borrower should have income in EUR, USD or in any other hard currency. Thus, the main category of mortgage recipients are people working in Cyprus with the status of permanent residents.
The mortgage rate is currently 5.5% per annum.
The collateral to obtain mortgage for property acquisition in Cyprus is the very property to be purchased. To obtain mortgage you are definitely required to submit evidence of your ability to repay it to the banks.
Basic parameters of a mortgage
You will have to determine basic parameters of the mortgage that are provided in the table below:
| Mortgage parameter | Comments |
| Amount |
The maximum mortgage amount declared by banks is 70-80%. However, the real figure may be less. Let's explain with an example. Let the buyer purchase an apartment for €300,000. The bank is ready to provide a loan in the amount of 70%, but not of the contract price of the apartment, but of the amount at which the bank itself values it. And this is usually less than the contract price. Let in our example the bank valuation is €270,000. The bank will provide a loan of 70% * €270,000 = €189,000, which is 63% of the price of the apartment. |
| Duration |
The maximum duration of a mortgage is calculated according to the formula “65 or 70 years minus borrower’s age”.The minimum term usually equals to 10 years. Advanced repayment is possible but it is usually associated with a penalty. |
| Rate |
A borrower may choose one of several rate calculation schemes. The rate may be referred to an interbank rate of Euribor (Libor) or to an internal rate of a bank. Some schemes have the rate calculated every 6 months while others have it fixed for the first several years. Payments are made on a monthly or quarterly basis. |
To obtain a mortgage one is required to have life insurance (for the amount and period of the mortgage credit). The purchased property shall be insured as well.
The normal period within which a bank makes a decision on issuing a credit comprises 1-2 months upon receipt of all the required documents.
Required documents
The standard set of information requested by a bank to issue a mortgage for immovable property acquisition in Cyprus includes:
- Applicant’s personal information (personality, occupation, evidence that the applicant is not in the international search)
- Income statement
- Proof of income
- Employer’s reference
- Reference from a bank where the applicant has an account
- Copies of bank statements for the recent three-six months
- Contract of sale for immovable property
- Copies of architectural plans of the property
- Copies of payments already made to property vendor
- Information on repayments per previously obtained credits
- Copy of an international passport
This list is approximate and requires clarification with a bank in this or that specific situation.
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