The popularity of Cyprus nowadays can be measured by the number of villas, apartments and plots of land purchased.
Thousands of people from different countries are making efforts to settle on the island, using different modes of investment. Depending on the factor of ownership of local properties, all residents are divided into two categories: owners and renters.
Buying a home on the terms of mortgage lending is quite popular, with banks trying to provide borrowers with the most favorable conditions. However, due to the rise in interest rates over the past year, the service is gradually becoming more and more affordable. This primarily affects the indigenous population of Cyprus.
Lease
The simplest and most common way of agreement between the parties. It involves a minimum of documents to be signed, and the property owner is only interested in the income of the tenant in the context of the monthly rent. Once all the terms and conditions have been agreed, the lease agreement must be certified by the Land Registry, which establishes the fact of transfer of the right of use. In addition, the signed agreement is the basis for the legal stay of a foreign citizen in Cyprus. It should be recognized that the legislation of the country primarily protects the interests and security of homeowners.
Advantages
- According to local canons, the services of intermediaries who offered an acceptable rental object are paid by the owner of the property.
- The tenant has the opportunity to choose the duration of his stay. As a rule, the contract is concluded for at least a year and can be prolonged by mutual consent of the parties.
- The tenant can discuss and initiate a reduction in the rent. The tenant is exempt from paying property taxes.
- The tenant does not take part in the repair of the apartment and the property, if the fact of his/her involvement in the damage is not confirmed.
- Renting an apartment with furniture and household items allows you to save certain financial resources.
- In case of a change in life situation (loss of job, change in the number of residents, preference for another neighborhood), the tenant can choose another option for living and terminate the contract (with penalties).
Disadvantages
- The tenant invests in someone else's real estate, which not everyone assesses positively.
- The owner is authorized to introduce a number of unacceptable conditions into the contract, for example: limit the number of residents, prohibit pets and visits of guests.
- The tenant is expected bureaucratic procedures related to the re-registration of utility bills on himself.
- Due to certain circumstances, the owner may unexpectedly raise the rent or even put the property up for sale.
To compare the monthly payment of real estate (rent and mortgage without utilities), let's choose a conditional one-bedroom apartment in a coastal city costing 300 thousand euros. Rent will cost at least 1200 euros per month. In the case of credit, after the mandatory down payment of 30%, the residual value of the object will be 200 thousand euros. Determining the loan period of 20 years, taking into account a credit rate of 4% per annum, the monthly installment exceeds 1200 euros. Thus, the mortgage payments are comparable to the cost of rent. Obviously, the credit cost per month is inversely proportional to the term of the mortgage agreement.
Mortgage
Fundamentally differs from rent by the transfer of ownership of real estate to the debtor. The necessary conditions for purchasing housing on credit are the availability of a sufficient amount for a down payment and a stable source of income. Until the repayment of the loan, the real estate itself is the collateral.
Advantages
- mortgage loan - a form of investment in their own real estate;
- in case of the need to leave Cyprus, the capital contributed by the borrower is not "burned", but reimbursed by the bank;
- purchase of housing with the help of mortgages gives the opportunity to apply for official status in the country.
Disadvantages
- For non-EU residents, the down payment must be at least 30% of the value of the property.
- To apply for a loan requires an impressive package of documents. The bank must find out all the background of the creditor, including the source and amount of income, the amount of current expenses. It is noteworthy that monthly payments should not exceed 30% of the declared income of the debtor.
- Before granting a loan, the bank independently assesses the real estate so that its price was not artificially inflated and corresponded to market conditions. In case of inability to make payments, this may play against the borrower.
- When applying for a mortgage, the buyer of real estate makes a one-time payment for the execution of documents and payment of government fees. In the case of a loan for the purchase of the above conditional apartment, the amount exceeds 4 thousand euros.
Taking into account all the advantages and disadvantages, both options of living are a viable option.
Rent is closer to those who do not have a guaranteed employment or do not plan to stay in Cyprus at the end of the employment contract, as well as due to other determining factors. To rent a home is inclined to individuals who prefer a periodic change of scenery and do not want to burden themselves with repairs and other household chores. Mortgage is preferable for those who see Cyprus as a place of permanent residence, but are unable to purchase real estate one-time. In addition, it is a time-consuming way of investing in Cyprus real estate.
In the selection process, everyone makes decisions based on their preferences and capabilities. However, it should be borne in mind that the reduction of the financial burden for any investment scheme in the near future is not expected.
Interested in properties in Cyprus? Check out DOM, the #1 real estate agency in Cyprus! The agency's website has the largest real estate database in the country - more than 30 thousand residential and commercial properties all over the island. Select and contact professional brokers who will help you make the right choice!
Read also:
