Legal and Finance Finance Mortgages for Greek Island Property
Mortgages for Greek Island Property
Many Greek and foreign banks offer mortgages to international property buyers even in times of restricted credit and the application procedure and repayment methods are similar to what you will be used to back home including the famous catch all clause of, “your home may be repossessed if you fail to keep up with repayments.” If you are considering obtaining finance to purchase your Greek Island dream pad then read on to learn more about what is available on the Greek mortgage.
Calculating Mortgages
If you are considering a mortgage on a Greek Island property, it is worth checking out your finances and working out what you can realistically afford especially during these times of economic crisis. Most Greek Island mortgage lenders will take into account the full picture of your finances rather than just your level of income and they will assess all outstanding credit commitments worldwide before reaching an acceptable amount. Non status mortgages are not available here. The majority of lenders have a minimum borrowing requirement of around 25,000 Euros over a period of 25 years, although the exact term will depend on your age. Lenders in Greece used to offer mortgages up to 90% of the property’s purchase price but today with restricted credit across the EU, 60 to 70% is more realistic. Loans can also be arranged for land, home improvements, renovation and new builds providing they cover residential property only and a valuation will be conducted by the mortgage lender. Many lenders will include up to 30% of the rental income as part of your repayment status, but need to obtain a Greek Rental Licence called an EOT Licence, which costs 5,000 Euros and will cover you for a period of five years. The purpose of the licence is to ensure that all rental properties are in accordance with the standards of the Greek Tourist Board.
Fees and Currencies
Greek mortgages are currently available in Euros, US Dollars, Sterling, or Swiss Francs. It is up to you to research which currency offers you the best rates. Greek interest rates are often amongst the highest in Europe (starting at around 4.5%) but you can use your existing UK home to raise finance for a Greek Island property. This is a straight forward process, providing you assess the risks involved should you at any stage default. Such mortgages will always be in Sterling or the currency according to the country where your first home is located.
It is also wise to take into account the fees you will have to pay to buy your property; these will include purchase tax, which is charged at around 9%-11% according to the value of your property, land registry, which is around 0.4% of the property’s value, stamp duty and relevant certificates, basically fees will cost you around 15% of the purchase price.
Making an Application
It will take around 6 to 8 weeks to secure your mortgage and one of the conditions will be that you take out building insurance with your lender. You will have to fill out an application form detailing the purpose of the loan along with the amount and repayment term. You will also have to provide copies of your passport photo ID page, proof of your worldwide income over the last two years (P 60 and salary slips for shorter periods are sometimes acceptable), six months of personal bank statements and if you are self employed, your audited business accounts for the last two to three years and six months worth of personal bank statements and twelve months of business bank statements. Some lenders may require more information and documentation from you. Mortgages for Off Plan properties will only be paid out on the completion of the property, so you will not be able to rely on it for stage payments. You can still apply for a mortgage for off plan property and will receive a mortgage offer in writing, which you can show to your developer.
Types of Mortgages Available
Below we list the types of mortgages available on the Greek mortgage market:-
Capital and interest repayment mortgages
No minimum term mortgages
Two year interest only mortgages
Thirty year maximum term mortgages
Fixed rate mortgages covering 3 to 25 year terms
Variable rate mortgages
Flexible terms with inbuilt payment holidays, overpayments and underpayments