Paying Mortgage vs Paying Rent in Cyprus

Аренда недвижимости или ипотека на Кипре
23 August 2021 DOM LiVE

The idea that you can buy your own house for money you spend on renting a home gives hope to every second tenant in Cyprus.

By the way, the country retains one of the highest rates of property ownership in Europe. And mortgage rates here are really low.

Today, the average rental price for a 100 m2 apartment is €650-800 euros. The average monthly loan payment may be at the same level.

Usually banks issue loans for 75-80% of the cost of housing. If we add the mortgage subsidies provided by the Ministry of Finance, the situation becomes even more favorable. So, a loan for housing for a period of 20 years in the amount of €150,000 at 2.2% interest rate and with a down payment of less than 35% gives a monthly payment of €773.19, and the overpayment of the loan will be €35,540.7.

For the same loan, but with state subsidized payments, the benefit for the borrower will be €8,962. The rate will be 0.7% in the first four years, and the average amount paid per month during this period will be €669.97 and €752.27 after the end of four years.

Under the same conditions, but with a repayment period of 25 years, the monthly loan payment is €650.57, and the overpayment is €45,136. Government subsidies in this case will reduce the monthly contribution to €545.19 in the first four years and €633.41 after this period. The overpayment will be €35,767, that is, the benefit will be €9,369.

As you may know, the main conditions for obtaining a government subsidy are that the loan should not exceed €300 thousand and be taken after March 1 of this year.

Аренда недвижимости или ипотека на Кипре

At the same time, the purchase of real estate in Cyprus gives the right not only to a temporary residence permit or permanent residence in Cyprus, but also the opportunity to receive a stable passive income from the rental of property.

Thanks to this, investors are able to quickly recover the money spent and make a profit.

It is worth noting that the purchase of housing for renting is one of the priority investments among Cypriots, who are interested in this type of investment not only on the island, but also beyond its borders. For example, in the UK (London) or Greece (Athens).

And this is not surprising!

After all, if we talk about deposits, then Cypriot banks have previously been able to offer their clients interest rates in the range from 0.2% to 0.8%. Today, due to the coronavirus pandemic, they are negative, profitability even in the medium term is very naive. Thus it makes no sense to keep your savings on deposits.

Each investor chooses the option that he prefers, although the benefits of buying for his own use or the subsequent renting out real estate in Cyprus are obvious.

You can find profitable options for buying real estate in Cyprus on the DOM Real Estate portal. The website also has a large number of rental properties - from residential to commercial real estate. Choose and contact professionals who will help you make the right choice!
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