Mortgages in Cyprus are one of the most popular ways to purchase residential and commercial real estate on the island among residents of CIS countries. Cypriot banks are willing to provide loans to Russians, Ukrainians, and other foreigners for purchasing construction properties, offering reasonable interest rates. The Cypriot government is keen on attracting foreign investment, making it relatively easy to obtain a mortgage as well as a residence permit. This is why many European investors choose to invest in real estate on the island.
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How to Obtain a Mortgage in Cyprus?
To obtain a mortgage from a Cypriot bank, you need to gather the required documents and provide proof of your financial capability. You can get a loan to purchase a property from almost any Cypriot bank. The borrower must be between 18 and 65 years old, with the maximum monthly payment capped at 33% of their income. The minimum loan amount is €75,000, while the maximum ranges between €300,000 and €500,000.
Based on our company’s analysis in 2018, among all banking institutions, Russian-speaking companies and individuals found it most comfortable to work with Hellenic Bank. The analysis was based on the ease and speed of obtaining a mortgage, as well as factors like document review timelines, the number of required documents, and service costs. Hellenic Bank excelled in all these areas, which is why we used their data as the basis for this article.
Everything About Mortgages: Terms and Interest Rates in Cypriot Banks
Hellenic Bank offers three mortgage plans:
- Basic Mortgage: Interest rate of 1.91%, with a minimum down payment of 30%. The maximum term is 30 years, with no additional fees, a grace period, and no fixed installments.
- Installment Mortgage: Interest rate of 3.53% to 3.83%, with a minimum down payment of 20%. The maximum term is 25 years, with additional fees, no grace period, and fixed installments.
- Non-Resident Mortgage: Interest rate of 3.98% to 4.28%, with a minimum down payment of 40%. The maximum term is 20 years, with additional fees, no grace period, and no fixed installments.
These plans cover mortgages for purchasing houses, apartments, townhouses, or villas, whether they are new or resale properties. Non-resident mortgages are also available for commercial property purchases. Investors commonly use these loans to buy residential or commercial real estate or land, renting out the property to gradually pay off the debt. Mortgages can also be used to cover renovation costs.
How to Get a Mortgage: Required Documents
Hellenic Bank usually requires the following documents:
- Passport
- A bank application form
- Proof of income (e.g., 2-NDFL form, employer’s reference, bank account statement, information on additional income sources)
- Sale and purchase agreement
- Property valuation report
Before applying for a mortgage, the borrower must open an account at the bank where they are applying. All documents must be filled out in Greek or English. The application review process takes 1-2 months.
Expenses When Issuing a Mortgage Loan
One-time expenses when obtaining a mortgage in Cyprus range from €150 to €500, plus a 1% fee based on the loan amount. Additionally, annual payments of €500 to €1,800 are required for property and life insurance, with the cost of insurance calculated based on the remaining debt, meaning it decreases over time.
Mortgage in Cyprus in 2024
In 2024, mortgage conditions in Cyprus for foreign citizens are characterized as follows:
- Mortgage Amount: Foreign citizens can apply for a mortgage ranging from €75,000 to €500,000, with a mandatory down payment. A larger down payment increases the chances of loan approval by the bank.
- Interest Rates: The average mortgage rate in Cypriot banks is 3.34%. The rate depends on the property’s value, loan term, down payment amount, and the borrower’s financial status.
- Loan Terms: Loan terms can vary from 5 to 40 years, with the borrower’s age at the time of loan repayment not exceeding 65 years.
- Down Payment: The down payment ranges from 20% to 50% of the property value. A higher down payment results in lower loan interest and a reduced interest rate.
- Additional Costs: These include taxes such as the transfer fee (ranging from 3% to 8%, depending on the property value) and VAT (standard rate of 19%, which can be reduced to 5% when purchasing the first new home).
- Insurance: Buyers are required to pay annual property and life insurance. The insurance amount depends on various factors and the loan amount.
- Property Purchase and Sale: Foreigners can choose properties independently or with the help of agents. Legal assistance is required to complete the transaction, with fees reaching up to 1% of the property value. A Capital Gains Tax is payable upon the sale of the property.
These mortgage features in Cyprus in 2024 provide foreign investors with various opportunities to purchase real estate, but it is important to consider all additional costs and borrower requirements.
