New Possibilities for Financing Real Estate Purchases in Croatia

In relation to Croatia’s accession to the European Union on 1 July 2013, the conditions for financing purchases of real estate in Croatia have been relaxed. Primarily foreign banks in Croatia have begun to grant to foreign nationals mortgages collateralised by the real property in Croatia that is being purchased.

The minimum mortgage amount is EUR 15,000. The maximum amount that can be borrowed from a Croatian bank is EUR 250,000. A loan may amount to no more than 50% of the purchase price of the property. The repayment term can range from 3 to 20 years. As a standard, bank charge administrative fees amounting to 1% of the loan amount. Open and active accounts at a Croatian bank are required: domestic (the Croatian kuna, HRK), and an account for foreign-currency transactions.

Loans are provided with a currency clause in EUR and paid out in HRK at the median rate of the creditor bank. Monthly repayments are paid in HRK at the given bank’s median rate of the EUR as at the repayment date.

Model example of mortgage conditions as at 1 July 2013

    Interest Rate         Actual
(Effective)
Interest Rate***
Monthly Repayment
in EUR
Total Amount (EUR)
Payable by Client


12M EURIBOR* + 6,20 p.p.** = 6,729 %

          
        7,08 %

        
           759,12

       
       183 188,38 


* 12-month (12M) EURIBOR rate as at 1 July 2013 is 0.529. The value of the twelve-month EURIBOR rate is, in line with the Mortgage Agreement, set once a year using the rate published on the REUTER’s page two business days before the start of the period to which the interest rate is to apply.
** p.p. = percentage point
*** The actual (effective) interest rate, the repayment amount, and total amount payable by the client have been calculated on the basis of the conditions stated, with a mortgage of EUR 100,000.00, a 240-month loan repayment schedule, and a 1% fee as at 1 July 2013.

The documentation required for the loan

  • Photocopy of identification documents or passports with a notification of residence in the Republic of Croatia
  • Certificate of a Croatian tax number (OIB)
  • Completed loan application form for all of the parties applying for the loan whose credit rating has been checked
  • A signed declaration for the purpose of the processing of personal information
  • Signed declaration of consent with the collection and processing of information from the HROK (Croatian loan commitment register) loan report for all of the parties applying for the loan whose credit rating has been checked
  • Originals of the last three pay-cheque slips or pension cheques (or verified copy)
  • Employer’s confirmation of loan applicant’s employment and monthly income

Additional documentation

  • Original land registry excerpt no more than 30 days old
  • A valuation of the price of the real property, unless the property has been newly constructed 
  • Insurance policy concerning the collateralised property, reserved for the benefit of the bank

The buyer must present a notarised purchase agreement. The maximum age at the time of the final repayment of the parties applying for a loan whose credit rating has been checked is 70 years. The bank reserves the right to assess each business case individually and require additional documentation and instruments to collateralise the loan as it deems fit.

Source: Rellox, Erste Bank (Croatia)

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