How to Get a Mortgage to Buy Property in Cyprus

The ins and outs of the mortgage market in Cyprus for anyone contemplating a property purchase in Cyprus

Anyone contemplating a property purchase in Cyprus will be pleased to learn that not only is the property market on this Mediterranean island mature and sophisticated but the mortgage market is as well.  What this means is that there’s a great deal of choice of mortgage lender and also a broad choice of mortgage type as well.

In terms of how to get a mortgage to buy property in Cyprus this depends on your requirements as well as your personal financial status for example.  In this article we explain how you can go about raising the finance to buy your dream Cypriot home.

There are a number of local banks in Cyprus which are probably the best first choice for anyone thinking about buying on the island.  They are completely au fait with the purchase process, they know the ins and outs of the legalities, they can communicate efficiently and effectively with vendors, developers, agents and solicitors and what’s more they really know the local property market.

The two biggest names by far are the Bank of Cyprus and Laiki Bank and you’ll find their branches all across the island; you can just walk in to make an appointment to discuss your mortgage requirements.  Most mortgages are currently offered in Cyprus Pounds – this will of course change to Euros from 2008 when Cyprus changes over to the Euro as its primary currency.

All banks in Cyprus are able to offer up to CYP 250,000 for the purchase of a property, the purchase of land for building a house on, for renovation, restoration or extensions, to buy a holiday home or a commercial property – loans in excess of this amount will be examined on a case by case basis and will depend heavily on the individual requesting the loan, their credit status, the amount they are willing to put down and so on and so forth.

Generally speaking mortgages are always guaranteed on the property…the only exceptions that exist are when you take out a housing related loan rather than a mortgage to renovate for example – then a loan can be secured on the property, against an insurance policy on the property, against life insurance on the borrower or on personal guarantees from the borrower.

Most mortgages are offered for a period of 25 years although because the mortgage market is getting more competitive some lenders offer up to 30 or even 40 year loans.  As with all mortgages the underlying interest rate payable by the borrower is based on the basic rate of interest set by the central bank and fixed rate or floating rate mortgages are available to buy property in Cyprus.

At the moment the Bank of Cyprus for example is offering buyers the chance to stall the repayment of installments for the first two years of the loan, during this payment holiday period only interest payments need to be made.

To apply for a mortgage you will usually need the following documentation to support your application.  A photocopy of your passport, personal reference from your main bank – or else you can be credit searched.  Proof of income which can be in the form of the last 3 months pay slips as well as your most recent taxation clearance form or an accountant’s letter regarding the applicant’s annual income and taxation returns if self-employed for example.

Additionally you’ll need to show the last 3 months bank statements for all your current, savings and loan accounts, a copy of a recent utility bill showing your current residential address, a personal and financial information statement, copy of sales contract and a copy of the application for or approval of the acquisition of immovable property from a district officer if applicable.  Arrangement fees are usually 1% of the loan amount and there is sometimes a documentation fee of about CYP 50.

Getting a mortgage to buy a property in Cyprus is not difficult – however there is plenty of paper work involved and the red tape can make the application process seem quite long and drawn out.  This means that if you need a mortgage to buy you should apply as soon as possible.