In recent years, Cyprus has become an increasingly popular destination for foreign investors and expatriates looking to purchase property. One of the most attractive options for apartment buyers is the opportunity to acquire property through an interest-free installment plan. In this article, we will explore how this financial instrument works, as well as discuss the main terms and benefits of buying an apartment in installments in Cyprus.
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What is Interest-Free Installment?
Interest-free installment is a payment method in which the buyer pays for the apartment in installments without incurring additional costs for the use of credit. This means that the total amount to be paid does not increase due to interest charges, making this option particularly advantageous.
Key Terms of Interest-Free Installments
The terms for purchasing an apartment through an interest-free installment plan may vary depending on the developer and the specific project. However, there are several common factors to consider:
- Down Payment: The amount of the down payment usually depends on the stage of construction. For apartments in the early stages of construction, the initial payment may range from 5-10% of the property’s value.
- Payment Schedule: Installment payments are typically structured according to the stages of construction. They are usually linked to key milestones, such as the completion of the foundation, erection of walls, or roof installation. The final payment is made before the apartment is handed over to the buyer.
- Installment Period: The standard interest-free installment period ranges from 12 to 24 months, depending on the current stage of construction. However, in some cases, especially for large residential complexes, this period may be extended to 36 months.
- Fixed Payment Amount: Since no interest is charged, the cost of the apartment is divided into equal parts, which are paid over the specified period.
If the Apartment is in an Off-Plan Project
When purchasing an apartment that is still in the planning or construction stage (off-plan project), the process of arranging installments is slightly different:
- Reservation Agreement: The first step is signing a reservation agreement, which outlines the main terms of the deal. At this time, the buyer pays up to 10% of the apartment’s value or a fixed amount, which is usually up to €10,000.
- Main Purchase Agreement: After this, the main purchase agreement is drafted, legally securing the rights and obligations of both parties. At this point, with the start of construction, the buyer makes an additional payment of another 20% of the apartment’s value, bringing the total to 30% of the purchase price.
- Contract Registration: The main purchase agreement is deposited with the Cyprus Land Registry, officially confirming the buyer’s rights to the acquired apartment. From this moment, the buyer becomes the owner of the property.
- Payment of the Remaining Amount: The remaining 70% of the apartment’s cost is paid in installments as each construction stage is completed. The final payment is made before the apartment is handed over, after which the buyer receives the keys to their new home.
Benefits of Buying an Apartment in Installments
Purchasing an apartment through an interest-free installment plan offers several significant advantages:
- Savings on Interest: The primary benefit is the absence of interest payments, allowing the buyer to save substantial amounts of money.
- Budget Planning Flexibility: The buyer can choose the most convenient payment schedule, making financial management and expense planning easier. Developers are flexible in this regard and can agree on a more convenient payment schedule for the buyer.
- Affordability: The ability to spread payments over an extended period makes buying an apartment accessible to a broader range of buyers, including those who do not have the full amount for a one-time payment.
Purchasing an apartment through an interest-free installment plan in Cyprus is a cost-effective and convenient solution that allows you to avoid extra interest expenses and flexibly distribute payments. The special terms for off-plan projects make this option even more attractive for those willing to invest in the early stages of construction. This method of acquiring property makes the purchase more accessible and appealing to a wide range of buyers.
