Cyprus Mortgage for expats in 2024: Detailed guide

Obtaining a mortgage in Cyprus in 2024 for expats is becoming increasingly accessible and popular. However, the process requires preparation and an understanding of the terms offered by banks on the island. Below are key aspects to consider when applying for a mortgage.

Down Payment

The down payment for expats is generally 30-40% of the property value. This is an important distinction from the terms for Cypriot citizens, who may only need to put down 20%. The larger the down payment, the higher the likelihood of loan approval and more favorable interest rates. Cypriot banks offer mortgages with varying levels of coverage depending on the type of housing:

• For a first home, Cypriot citizens can receive a mortgage covering up to 80% of the property’s value.
• For a second home or holiday home, the maximum loan amount decreases to 70%.

Interest Rates

Interest rates vary depending on the bank, loan amount, term, and the borrower’s financial situation. In 2024, average rates for expats range from 3.75% to 5.5%:

• Bank of Cyprus offers mortgages with a starting rate of 3.75% for amounts up to €150,000, with the possibility of a fixed rate for the first 3, 5, or 10 years. After that, the rate becomes variable.
• Alpha Bank provides loans starting at 5.5%, with a maximum term of up to 40 years.

For larger amounts, such as €500,000, rates may increase depending on the loan term and other factors.

Loan Terms

Mortgage terms for expats can range from 10 to 40 years. However, there are age restrictions—borrowers must repay the loan before turning 65. Depending on the bank, different payment schemes are available. For example:

• Bank of Cyprus offers loans with a maximum term of up to 35 years, including the option of a fixed rate for the entire loan period (e.g., for 25 years).
• AstroBank allows for mortgages up to 40 years, with the option of a grace period during the first year, where you can pay only the interest or defer principal payments.

Additional Costs

A mortgage in Cyprus comes with several additional costs that expats should consider:

• Registration fees. This is a fee for registering the mortgage with the Cyprus Land Registry, which can vary depending on the property’s value.
• Legal services. Document preparation and transaction support require hiring a lawyer, whose services may cost up to 1% of the deal’s value.
• Property and life insurance. Insurance is a mandatory requirement. The cost of property insurance typically ranges from €350 to €1,200 per year, while life insurance for the borrower is between €150 and €600 per year.
• Property valuation. Before approving a mortgage, the bank requires a property valuation, which costs around €300.

Required Documents

To apply for a mortgage in Cyprus, expats need to provide a standard set of documents, including:

• Passport and proof of legal residence (e.g., residence permit).
• Proof of income (e.g., income statements for the last three months or tax returns for the self-employed).
• Property documents (technical passport, ownership documents, and property valuation).
• Credit history. Banks thoroughly check borrowers’ credit histories, especially for non-residents. A good credit history increases the chances of obtaining favorable loan terms.

Special Programs

Some banks offer specialized programs for purchasing energy-efficient housing. For example, Bank of Cyprus offers the Green Housing Loan program, which provides lower interest rates for properties with an energy efficiency certificate of category A. The rate can be fixed for 3, 5, or 10 years, after which it becomes variable. These loans may also include a grace period for payments.

Mortgage Process

The mortgage process in Cyprus typically takes 1 to 2 months and involves several key steps:

1. Application Submission. You need to gather all the necessary documents and submit them to the bank. At this stage, the bank checks the borrower’s credit history and ability to pay.
2. Property Valuation. The bank conducts a valuation of the property to ensure its market value.
3. Loan Approval. After analyzing all the data, the bank makes a decision on approving the mortgage. If approved, the borrower signs the mortgage agreement.
4. Property Registration. After signing the agreement, the property must be registered with the Land Department.

Grace Periods and Payment Deferrals

Some banks, such as Bank of Cyprus, offer the possibility of deferring payments in case of unforeseen circumstances. Borrowers may defer up to two monthly payments per year, which can be helpful in case of temporary financial difficulties.

Thus, obtaining a mortgage in Cyprus for expats in 2024 requires a thorough approach and careful analysis of all terms and additional costs. Timely document submission and seeking professional advice will help avoid mistakes and select the most favorable conditions for purchasing property.