Mortgage in Cyprus. How to Get a Real Estate Loan for a Foreigner

Real Estate Loans in Cyprus

The Covid-19 pandemic has affected the Cyprus mortgage lending market. During the first half of 2020, the number of loans decreased by a record 17% year-on-year.

In the second half of the year, despite stricter lending criteria caused by coronavirus risks, the volume of services increased. One of the reasons is the state scheme of subsidizing interest on housing loans, introduced in May 2020. The subsidy is issued for four years and covers up to 1.5% of the mortgage loan rate up to €300,000. Another reason is that the deferred demand from borrowers who postponed the decision until the end of the lockdown was realized.

The state support scheme applied to loans taken from March 1 to December 31, 2020. Due to the popularity among the local population, the government decided to extend the program until the end of 2021 and increased the funding threshold to €400,000.

You can learn more about the details of obtaining a state subsidy for a mortgage on the websites of banks:

• Bank of Cyprus
• Hellenic Bank

The volume of mortgage loans in 2020 amounted to €941 million, which compared to 2019 (€972 million) corresponds to a reduction of only 3%.

The change in mortgage loans volumes in Cyprus according to Central Bank of Cyprus

According to The Global Economy, mortgage rates in Cyprus have decreased from their maximum level of 6.65% in 2013 to 1.65% in April 2021.

Changes in mortgage loan rates. Source: Central Bank of Cyprus

Sergey Smolensky

Empire Property Cyprus

Mortgages in Cyprus are mainly used by locals. About 10-15 years ago, citizens of other countries often resorted to the services of banks. Nowadays they rarely take out a mortgage. The percentage of approval of applications from foreigners is high, provided that the potential buyer can submit the documents required by the bank in full. The main thing is to prove solvency and the ability to repay the loan in a timely manner.

Mortgages for Foreigners

There are three main banks in Cyprus that are in demand among foreigners: Bank of Cyprus, Hellenic Bank and Alpha Bank.

A foreign borrower is a risk for any banker. It is difficult to assess the reliability of a non-resident and their subsequent financial capabilities. Therefore, banks are more favorable to foreigners who permanently reside in the country or receive income from work here.

The conditions for foreign clients are much stricter:

• a resident of the country needs to have 20% of the cost of housing to pay the initial payment,
• a non-resident needs 40% of their own funds.

The interest rate on the loan will also be different: for citizens or permanent residents of Cyprus, it is almost always about 2.0-2.5% per annum, while a non-resident is more likely to be offered a rate of 4.0-4.5%.

Marina Popovidou

Antaria Homes Real Estate Ltd

Banks carefully check their clients and protect themselves as much as possible from insolvent borrowers. Income has a major impact on success in obtaining a positive decision on granting a mortgage loan. If the applicant is married, then their spouse will need  to be a guarantor and confirm the partner's solvency. This is another precautionary measure of banks.

Requirements of Banks to Foreign Borrowers

Banks consider applications from customers who have reached 18. The maximum age of the borrower at the maturity of the loan is 65 years. The applicant for a mortgage is obliged to insure life (for the amount and term of the loan).

The financial burden that will fall on the shoulders of the client is also estimated. The ratio of income and expenses related to the loan is important here. The maximum share of the monthly payment should not exceed 33% of the total family income per month. The bank needs to be convinced that the payment on the loan will not leave the client without means for a normal existence, otherwise they may be insolvent.

Marina Popovidou

Antaria Homes Real Estate Ltd

The first thing that the bank pays attention to when considering an application is the source of the client's income. If it's only in rubles and this is the main salary, then the risk of refusal is quite high. If the borrower has an income in euros or pounds sterling, this will significantly increase the chances of getting approval. The origin of the funds should be clear and legal, you will need to submit statements about the movements on the accounts and report on the sources. If the client's income is €2,500-3,000 and they want to get a loan for an object worth €150,000 per month, then they need to have at least 50% of own funds for the initial payment.

Sergey Smolensky

Empire Property Cyprus

The applicant's monthly income must be twice the amount of the payment. In this case, the loan can be issued for two family members (for example, a husband and wife). In this case, the income of both spouses is summed up. It is also necessary to report on the welfare of the family. The applicant must own real estate and preferably a car. And it is very good if they have an additional property that is rented out. The chances of obtaining a loan increase for people who request an amount of less than 50% of the object's value, have wealth, high wages or a good income from business activities. For example, the applicant has 100% of the funds for the purchase of real estate, but it is more profitable to pay part of the cost of the object, take a loan, and use the rest of the amount for business purposes.

Bank Requirements for Real Estate

The bank conducts a mandatory assessment of each real estate object to determine the amount that it is ready to provide in a particular case. Experts also analyze the liquidity of real estate.

Loans are provided for the purchase of housing both on the primary market and on the secondary market. But the objects from the developer are more willing to lend.

The amount of a mortgage loan for the purchase of real estate on the secondary market is determined by estimated value and rarely exceeds 50%. Also, secondary buyers should make sure that the seller has a title to the property, otherwise they will not be given a loan.

Examples of residential real estate in Cyprus

299 000 €

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132 sq.m 3 2

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800 000 €

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550 000 €

Villa in Limassol, Cyprus

190 sq.m 3 2

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A detached 3 bedroom villa is available for sale in Moniatis in a great location with panoramic views as it combines the tranquility of a quiet area surrounded by pine trees with all the everyday amenities.

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1 100 000 €

Penthouse in Limassol, Cyprus

3 2

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Residential building under construction in a quiet area of the tourist area of Germasoia, Limassol, just 500 meters from the sea. The project contains four levels, a penthouse and a roof garden. Each apartment has luxurious details in the interior and a private covered parking.

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486 843 €

Villa in Kyrenia, Cyprus

165 sq.m 4 3 3

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This quiet and cozy complex will consist of 5 villas of modern design and engineering. All villas have a 3+2 format with three bathrooms. Beautiful villa of 165 m2 700 meters from the sea. The complex is located in a quiet, peaceful place near all the necessary infrastructure. High quality of construction and finishing materials. Stylish...

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850 000 €

Flat in Limassol, Cyprus

121 sq.m 3 2 1

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For sale apartment of 121rs in Limassol. The apartment is situated on the 2nd floor. consists of 2 bedrooms, living room, one kitchen, one bathroom, one WC, one storeroom. Flat has interior layout. There are solar panels for water heating and air conditioning. The owners will be leaving the furniture with the sale. There is an alarm system...

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646 000 €

House in Paphos, Cyprus

172 sq.m 3 3

Residence

For sale 1-storey villa of 172rs in Paphos. Villa consists of 3 bedrooms. The owners will be leaving the furniture with the sale. The property boasts a swimming pool of private use. AgnadesVillage, Villa No. 3 is a beautiful coastal countryside3 bedroomvilla for sale in the famous summer destination of Polis in Cyprus. The villa is adjacent to...

Mercury Group

850 000 €

Flat in Limassol, Cyprus

138 sq.m 4

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For sale apartment of 138rs in Limassol. The apartment is situated on the floor. Flat has interior layout. The owners will be leaving the furniture with the sale. Extras included with the property: garden.

Mercury Group

850 850 €

Townhouse in Limassol, Cyprus

153 sq.m 4 3 2

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For sale maisonette of 153rs in Limassol. The maisonette has 3 levels. The ground floor consists of living room with kitchen, one WC. The first floor consists of 2 bedrooms, one bathroom. The second floor consists of one bedroom, one bathroom. The property is subject toe are solar panels for water heating and air conditioning. The owners will be...

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1 650 000 €

House in Limassol, Cyprus

450 sq.m 1

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A splendid family home that has been built to an extremely high standard with considerable thought given to the detail. The accommodation comprises of double front door leading onto a generous open plan sitting room with feature fireplace and patio doors, second reception/office and library, utility room & guest WC. There is a large, modern,...

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210 000 €

Flat in Paphos, Cyprus

54 sq.m 1 1

The residential complex is a unique project located on a hill in one of the districts of Paphos - Chlorak near the coast. The objects of the complex are distinguished by a comfortable modern design with elements of traditional Mediterranean architectural style. Each object is designed in such a way as to provide a beautiful view from the window....

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Villa in Paphos, Cyprus

304 sq.m 5 4

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Apartment in Paphos, Cyprus

62 sq.m 1 1

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Flat in Paphos, Cyprus

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Townhouse in Esentepe, Cyprus

41 sq.m 1 1

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Townhouse in Paphos, Cyprus

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Permanent residence under the accelerated scheme. Modern built townhouse with sea view in the suburbs of Paphos. Ready for operation.The two-bedroom townhouse is located in one of the most popular areas of Geroskipou, just a few minutes drive from the city, the sea, taverns, cafes and supermarkets.On the ground floor of the house there is a...

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Documents for Obtaining a Mortgage

Banks usually request the following documents from the borrower.

• The international passport and its copy
• An application for a loan
• A completed application form
• A certificate from the place of work indicating the position and salary amount
• A certificate of income from the place of work
• A certificate of no criminal record
• A bank certificate of account movements for the last two or three years
• A purchase and sale agreement
• Copies of payments already made in relation to the property
• Insurance (if available)
• The title of ownership (secondary housing)
• A permission from the local authorities to purchase real estate in Cyprus
• A confirmation of payment of stamp duty
• A letter of recommendation from the bank where the applicant is served in the country of residence
• Tax returns for the last three years
• If the applicant owns the company, then copies of the constituent documents
• Copies of documents on ownership of any other immovable property
• The conclusion of a licensed appraiser about the purchased real estate object
• Any other documents proving the financial reliability of the client

All documents must be translated into English or Greek and notarized.

Important! Usually, banks in Cyprus have their own list of appraisers whose reports they accept. Before submitting an application, you should clarify this point and get the appropriate instructions.

On average, it takes 2-4 weeks to review an application. If the buyer confirms a good level of income and their legality, then they have a chance to get a positive decision on a mortgage loan. 

Sergey Smolensky

Empire Property Cyprus

First of all, you need to open an account in the bank where you plan to take out a loan. Then transfer an amount of at least 30% of the property value to it. After that, an application is submitted to the credit department and the necessary documents are attached.
The term of consideration of the application in practice reaches up to a month. The bank may individually request some additional documents and explanations. After the loan is approved, the bank evaluates real estate and names the interest rate, which depends on the loan amount, the loan term, the frequency of repayment (monthly, quarterly, once a year), the age of the borrower, citizenship and many other factors.

Typical Conditions for Foreigners

Additional Expenses

• The assessment of the loaned property - €250-550.
• Real estate insurance – about €350-1200 euros per year.
• Life insurance of the borrower – €150-600 per year.

Quoting conditions of Prian.info materials