Throughout 2021, Cypriot banks have been actively trying to attract new mortgage borrowers with the help of low interest rates and a program of government subsidization of interest rates, which expires at the end of this year.
However, the number of new borrowers turned out to be much less than expected by local financial institutions.
And all because today it is much more difficult to get a loan in Cyprus. In some cases, the borrower must provide an impressive down payment, which directly depends on the value of the purchased property.
Many borrowers regretfully recall the days when they took out a mortgage that covered 70-80% of the cost of housing, and took out a consumer loan for the remaining 20-30%. Thus, the Cypriot banks actually covered 100% of the housing loan.
However, these times are in the past and now the loan amount in different banks ranges from 50% to 80% of the value of the purchased property. In most cases, local financial institutions ask for 30% of the requested loan amount. At the same time, the more money the borrower contributes, the more loyal the attitude towards him, as the bank's risks decrease.
For example, if a potential client of the bank is interested in buying a property worth 200 thousand euros, he will have to pay out of his own pocket at least 60,000 euros, because only then will the bank consider an application for a mortgage. It is noteworthy that the amount of the monthly contribution should not exceed 40% of the income. The term for which the loan is issued is determined by the amount of the initial payment and mortgage interest. At the time of loan repayment, the borrower, as a rule, should not be older than 65-70 years (the exact age depends on the bank's policy).
The interest rate on the loan can be fixed or floating. The first one remains unchanged during the agreed payout period, and the second one is set based on the Euribor reference rate.
The interest rates depend on the bank's policy, the borrower's profile, the loan amount and the rate. Some Cypriot banks provide an opportunity to combine fixed and floating interest rates. For example, a mortgage loan can have a fixed interest rate for a period of 3.5 to 10 years, and for the rest of the time ― floating.
What mortgage conditions are offered by Cypriot banks to customers interested in buying real estate today:
Bank of Cyprus
Provides a loan of up to 80% of the value of the property for up to 35 years. The client can choose a floating interest rate for the entire term of the loan or a fixed interest rate for 3.5 - 10 years, after which it becomes floating. The maximum age of the borrower at the time of mortgage repayment should not exceed 65 years.
If the client makes an initial payment of 35%, the interest rate is 2.30%, if less than 35% - 2.40%. The minimum loan repayment period is 10 years for loans with a floating interest rate throughout the repayment period and 5-10 years for loans with a fixed rate.
Provides loans that cover up to 80% of the cost of real estate when buying a first home and up to 70% of the cost of real estate when re-buying. The maximum mortgage term is 40 years. The maximum age of the borrower at the time of mortgage repayment should not exceed 70 years.
Provides loans that cover up to 80% of the real estate value. The maximum mortgage term is 40 years. The maximum age of the borrower at the time of mortgage repayment should not exceed 65 years. The mortgage interest rate depends on the amount of the client's down payment: 20-30% - 2.45%, 30-50% - 2.20%, more than 50% - 1.80%.
Provides loans that cover up to 80% of the real estate value. The interest rate depends on the amount of the initial payment. For example, for loans of up to 400 thousand euros with a maturity of 30 years and an initial payment of 50% or more, the interest rate is at 2.92%. If the initial payment is less than 50%, the rate increases to 3.23%.
Offers mortgage plans that cover up to 80% of the property value. The interest rate depends on the amount of the initial payment. For example, for a loan of 100 thousand euros, the interest rate is 1.99% with a repayment period of 35 years and a client deposit of more than 30%.
Cooperation with a Cyprus bank is a great opportunity to take out a mortgage as profitably as possible. Moreover, it is often possible to buy a house in Cypruson credit is much more practical than renting a property.