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Cyprus Property - Need A Mortgage?

How can I secure a mortgage in Cyprus?

Securing a mortgage in Cyprus is a simple procedure as long as you are able to contribute around 20% - 30% of the selling price and you can satisfy the bank that you are able to make the monthly mortgage payments.

Note that the banks insist and carry out a valuation of the Cyprus property you wish to buy. That valuation must agree or be close to the selling price otherwise the bank will offer you a mortgage of 70% - 80% based on the the property valuation and not the selling price.

When should I contact the Bank for a mortgage?

If you are not a cash buyer it would be advisable to discuss with your bankers and us what available funds you have to put as a deposit and for other related expenses, prior to viewing properties in Limassol or making an offer on a Cyprus property.

It can be a time consuming and costly exercise for you and for us if you make an offer on a property, place the down payment, and then realise you cannot secure a mortgage to cover the balance of the selling price.

In what currency can I have my mortgage?

The Cyprus currency is now the euro but mortgages can be given in different currencies like Dollars, British pounds etc.

For how many years can I have a mortgage?

It can be for a period of 1 year up to maximum of 40 years,  depending on the applicant's age.

What extra costs will I face if I decide to apply for a mortgage?

1) If you are getting a bank mortgage you will bear the cost of the written property valuation carried out by a professional property assessor. The bank will demand a proper property valuation if you are requesting a mortgage. The charge to you for the cost of the valuation report should be around €200 - €300 euro.

2) An arrangement fee of up to 1% of the amount of the loan

3) Documentation fees.

What securities will the bank require?

1) The First Legal Charge over the immovable Cyprus property to be purchased, or assignment of the sale contract supported by a bank guarantee from the seller. If the property is still under development and is already mortgaged in favour of the bank then no bank guarantee will be required.

2) Assignment of a Fire Insurance Policy

3) Mortgage Indemnity Insurance

What information should I provide the bank together with my application?

1) A copy of the Contract of sale

2) Proof of the down payment given to Seller (around 20% -30% of the purchase price)

3) Proof of income (usually last 3 moths pay slips or your accountants declaration of earnings if self employed)

4) Completion of bank application form with statement of assets and liabilities

5) Copy of your passport (first two pages)

6) Your residential address and date of birth

7) Other Bank Reference may be also requested if you have no account with the bank giving you the mortgage.

8) Details of the purchased property including the title deeds in case of a resale or the a copy of the planning and building permission and a set of architectural plans in the case of a property that is still under construction.

What is a bank guarantee?

That only only applies to relatively newly build properties where title deeds have yet to be issued. A Bank guarantee is an agreement between the buyer, the developer and the developer's bank that ensures that the title deeds will be issued.

In case the title deeds are not issued within the specified time limit due to the developer's fault then the buyer has the right to exercise the bank guarantee and get his money back.

However, the issue of bank guarantee and the problems and delays concerning title deeds will be resolved very soon.

A new law taking effect by the end of this year will give the right to any property buyer, who has his sales contract deposited with the Land Registry Office, to apply himself or through his lawyer directly to the Land Registry Office for the title issue.

How long does the whole process take to get a loan?

It takes approximately 2 - 4 weeks from the time you provide the Bank your written application and the required documents.

What is meant by Security?

By security we mean the collateral that will be put down towards the mortgage loan. Any lender anywhere in the world has to have some kind of security through which they can claim the money they give to people, in case the loan defaults.

The security can be the title deeds to the property or in case the title deeds have not yet been issued then a bank guarantee or a partial mortgage initiated by the developer on behalf of the buyer. This may sound a bit confusing to the buyer but it is actually standard procedure in Cyprus.

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