Housing loans for foreigners in the Republic of Croatia and Croatians living abroad – everything you need to know!

We previously wrote a blog about how foreigners , or EU citizens, can get loans from Croatian banks. As our coast, and recently the interior, are increasingly popular destinations, this is becoming an even more interesting topic. However, we have also received many inquiries from those who are EU citizens residing in Croatia, as well as Croatians living in the European Union. How can they get a loan? How do Croatian banks view their employment and income?

In order to explain everything in detail, we are writing another (this) blog. Below, find out all the necessary information that is important to you when buying real estate in Croatia!

Loans for foreigners – who can get a loan?

When we say loans for foreigners, we mean persons from abroad who live in the Republic of Croatia, as well as Croatians living abroad. But we know what you first thought: what exactly do we mean when we say abroad? Does this apply only to the European Union or to the entire EEA area? Well, let's first clarify who this article is intended for!

Citizens of the Republic of Croatia who live abroad can obtain a housing loan if they have a residence and employment in:

  • one of the member states of the European Union (EU)
  • one of the member states of the European Economic Area (EEA), which includes the member states of the European Union and Iceland, Liechtenstein and Norway
  • the Swiss Confederation.

Accordingly, loans for foreigners apply to foreign citizens from the above-mentioned areas who have a residence and employment in the Republic of Croatia.

And those others who do not fall into any of the above-mentioned areas? Foreign citizens who are employed and have a residence in the Republic of Croatia, or who reside in Croatia on the basis of a valid residence permit for a period of at least 183 days, are considered residents. (This does not apply to diplomatic and consular representatives and their family members.) Therefore, these citizens can get a loan under the standard conditions that also apply to Croatian citizens. This does not apply only to those from the EU, but from all over the world!

Now that we have clarified this, let's see what exactly you can get a housing loan for!

What can you get a housing loan for?

Did you know that you can get a loan not only for buying a house or apartment? Even if you have decided to build from scratch or just decided to buy construction land on which you will (one day) build, you can contact banks. More precisely, a housing loan is approved for:

  • Purchase of residential property, i.e. a house, apartment or apartment
  • Construction of residential property
  • Adaptation or completion of construction of residential property
  • Purchase and/or communal development of construction land
  • Improvement of the energy efficiency of residential property, i.e. moving to a higher energy efficiency class.

So, a housing loan for foreigners residing and working in Croatia, or a housing loan for citizens of the Republic of Croatia residing and working in the European Union and the previously mentioned areas, covers much more than just buying a property.

In other words, you can also get a housing loan when, for example, you have inherited a property and want to renovate it. Or when you already have a property and want to renovate it. If you are still not sure, contact Croatian banks and check if you can get a loan for your construction and transactional projects.

What are the conditions for obtaining a loan?

All foreign and domestic citizens that we mentioned in the previous section must, of course, also take into account the conditions of the banks. We note that everything we will list is subject to change. And no, it does not depend on the mood of your personal banker, but on the risk assessment that the bank will make, or your creditworthiness.

Creditworthiness actually refers to the level of ability to repay future debt. The higher the risk - the less favorable the conditions! This includes numerous factors, from employment, your monthly income (its amount and consistency), employer, number of members you support to whether you already have a loan from the selected bank or other banks.

However, these are some of the general conditions that you will receive from Croatian banks.

The loan amount can reach up to 80% of the assessed value of the property. Therefore, you will not receive the full amount for the purchase or renovation, and the exact amount of the loan will be determined by your personal banker, depending on the purpose and your creditworthiness. In other words, you must provide at least 20% of your own funds before contacting the bank!

And here we will also mention important information for assessing the value of the property. The bank will send a court expert for an assessment, but his cost is on you. Depending on your agreement with the bank, you can expect it to cost you around 350 euros or more.

Furthermore, the repayment period of the housing loan depends on the bank you contact. While some have a maximum term of 30 years, others will limit it to 20 years.

The interest rate on a home loan also varies from bank to bank, no it is always fixed.

What documentation do you need?

We know, there is probably no person in this world who likes paperwork. And you also know that when applying for a housing loan, you will be greeted by a lot of paperwork.

So that you come to the bank prepared and so that they do not send you "for another piece of paper", here we list all the documentation you must bring with you.

The basic documentation, which applies to you and on the basis of which your creditworthiness is determined, includes:

  • Identity cards - we write in the plural because, if you are buying a property, you must provide your own identity card, as well as that of the seller of the property
  • Three most recent pay slips
  • An employer's certificate with employment information, which includes the date of commencement of work, gross and net income and confirmation that your employment contract is concluded for an indefinite period
  • A certificate from the tax authorities in your country of residence confirming that you have no tax debt.

 

The documentation related to the property you want to buy or renovate includes the following documents.

  • A valid title deed, which must be spotless, i.e. free of encumbrances (except those deemed acceptable by banks).
  • A complete energy certificate for the property (do not submit just the first page).
  • A use permit, or a copy of it, which does not have to be registered on the title deed.
  • A declaration of marital assets, i.e. a form that the bank will give you and which the seller must sign. In Croatia, even if the spouse is not a co-owner of the property, they must give their consent for the property to be sold.
  • Proof of acquisition of the property, which again applies to the seller of the property. Some banks will require a contract or document by which the seller will prove how he/she acquired the property.
  • A purchase and sale agreement, which is mandatory, but does not have to be officially certified. Both parties should sign each page of this preliminary agreement. It should also be stated here whether the property contains, for example, a parking space or a garage, as this is often not covered by a bank loan.
  • The condominium status of the property. Keep in mind that banks only provide loans for properties that are condominiums, or that have 1/1 ownership.

What happens when you get a loan?

With some banks, you will be able to certify the sales contract and the loan agreement on the same day. However, some will ask you to certify the sales contract, and only then will you receive the loan agreement. Keep this in mind if the seller of the property is a foreigner or does not live in the place where you are applying for the loan. And if the seller is a foreigner, keep in mind that some banks do not want to make payments to accounts outside of Croatia, so be sure to check this too!

Once you have settled everything, take the loan agreement you signed with the bank to a notary, who will certify and solemnize it. The cost of this is between 800 and 1200 euros, depending on the price of the property.

Also, keep in mind that before disbursing the loan, the bank must register a mortgage on the property. But since you've already come this far, you won't have a problem waiting one or two days for this step. :)

And that's it! We hope we've clarified any doubts you may have had and we wish you the best of luck with getting a housing loan.

And if you don't yet have a property you'd like to apply for, you'll always find a rich selection of houses and apartments in our beautiful Istria!