Igor Katušić,  Tuesday, 19 November 2013

 

This article is part of a series of 8 articles about buying property in Croatia. The other articles in the series cover the following topics:

Property Buying Guide
Why and where to buy
Finding an estate agent
Buying Process
Documents
Costs
Property Taxes

For now only one bank offers a mortgage based loans for a real estate purchase for non-residents of Croatia – Erste Bank. This program started back in 2010 and by now, the bank provided hundreds of foreign citizens with the loans.

So in this moment we’ll presume that you’re foreign citizen and not eligible or not wanting to apply for a Croatian citizenship, but want to buy a real estate somewhere on a beautiful Croatian Adriatic coast. For that you need money of course, and one of the most used ways to acquire the substantial amount of money to buy a property anywhere in a World today is – mortgage based loans.

With the exception of the Erste Bank, no other bank in Croatia offers the loans for non-residents – at least none of the major banks, and you really would want to avoid some small and low profiled loan agency.
According to the provided information from the Erste Bank, foreign citizen is eligible to get the mortgage based loan with mortgage set on the purchased estate. That can be house, apartment, building lot, etc…
In short you can get up to 250.000€ counter-valued in Croatian KN, on a period between 3 and 20 years with the effective interest rate of 7.1%. In addition, you’ll have to pay a one-time bank fee of 1% of granted loan amount.
So let’s say you are about to raise a 100.000€ mortgage loan with the repayment plan of 240 months. You will have to pay a 1.000€ one-time fee, while the monthly annuity would be 760.25€. At the end, you will pay the grand total of 183.459.31€.

That’s the example, but what about the conditions and insurance instruments needed for the loan?

Conditions and Loan Security Instruments

The following information are collected from the Erste Bank’s official informative leaflet and can serve you as the guide in your quest.
For the loan from 15.000€ up to 250.000 € you will need the following loan security instruments:
· Statement on compliance in accordance with the attachment of earnings order, certified by a Notary
· Bill of exchange
· Statement pursuant to the Article 214 of the Seizure Act (regular promissory note) certified by a Notary
· Mortgage 1:1 and cash deposit at the Bank
Loans are granted with the currency clause in EUR and paid out by applying the middle exchange rate of Croatian National Bank. Monthly installments shall be paid in HRK according to the middle exchange rate of Croatian National Bank for EUR on the day of payment.
Required loan security instruments for the borrower, sureties and guarantors Interest rate on a cash deposit that serves as the loan security instrument is 0.05%. The Erste Bank further states that it reserves the right to request additional loan security instruments in its sole discretion.

Required documents are enlisted as follows:

Photocopies of ID cards or passport with registered residence on the territory of the Republic of Croatia, i.e. passport for non-residents and ID cards for European Union residents.
Tax number (PIN) certificate issued from Tax Administration.
Completed Loan Application form for all loan participants whose credit standing has been assessed.
A signed Statement for processing of personal data.
A signed Statement approving collection and processing data from HROK’s credit report for all loan participants whose credit standing has been assessed.
Original last three payroll or pension slips (or a certified copy).
Employer’s confirmation regarding the employment status and monthly income of the loan applicant.
If you are retired and receiving a foreign pension; then you need to provide the official document from which that fact can be verified.

Additionally you’ll have to provide the following documents:

Original excerpt from the land registry, not older than 30 days from the date of issue.
Property value assessment, unless it is a newly constructed property.
Insurance policy for mortgaged property tied in a favor of the Bank.

For loan participants whose credit standing is being assessed, the maximum age at the moment of the final loan repayment deadline is set at 70 years.

These are Erste Bank’s conditions for you to apply to in order to get the mortgage loan. The procedure is quite fast and real estate sellers are well aware of the current market situation where the bulk of all deals are done through the mortgage loans.
Therefore, and under the presumption that you are eligible to get the loan from the bank, buying of a real estate in Croatia through the mortgage loan will be fast and easy due to the fact that the bank itself provides all necessary logistic from their behalf; while real estate agencies provides you with the assistance in every single step of the way.