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The financing available for property purchase is an important factor when making a purchase decision. Quality Group has negotiated favourable terms with a number of financial institutions, along with a standardised mortgage application process.
The following will apply to all clients buying property from Quality Group who would like to arrange a mortgage.
LOAN TO VALUE
Financial institutions may finance up to 80%* of the value of the property. The applicant must provide the remaining 20%* from his/her resources and this amount must be paid before the bank draws down on any approved mortgage funds.
*These percentages may vary depending on the financial institution and the client’s residential status.
REPAYMENT TERMS
The maximum repayment term is up to 40 years, subject to the term not exceeding the applicants 70th birthday. In the event of joint applicants, the banks will take the age of the older applicant into account.
GRACE PERIOD
When buying an off plan property, applicants may have the option of paying nothing during the construction stage, subject to a maximum of two years and subject to the bank’s approval.
The bank makes the stage payments for the applicant (after the client’s contribution has been paid to the developer) and the interest accrued during this phase is capitalized and repaid during the course of the mortgage repayment term.
Alternatively, to cap the capital borrowed, clients can pay the interest (calculated against draw downs only) during the construction period.
INTEREST RATES & CURRENCY
Loans in Cyprus can be set up in any currency. However, it is recommended that the currency of the loan matches the currency of the purchase – in this case, the Euro.
The most popular alternative to the Euro is the Swiss Franc.
PROOF OF INCOME & IDENTITY
There are no self-certification mortgages in Cyprus. Therefore, the banks need the following to establish affordability and identity:
- Copy of each applicant’s passport.
- Four months most recent bank statements. These should give the bank an overview of the applicant’s income and expenses. Therefore, if more than one account is used for income credits and outgoing debits, then four months worth of statements for each account should be provided.
- Last four months pay slips and P60 (UK applicants) or equivalent annual tax summary. For the self employed, last 2 years tax returns are required.
- Last mortgage statement (to prove outstanding balance and payment history).
- A redemption statement for all other loan agreements to prove outstanding balance and remaining term.
- For UK applicants, a personal credit report from a UK credit scoring company, such as Experian. (www.experian.com)
- A utility bill to prove address.
- The banks completed application form.
Please note that a mortgage application will not be processed without all of the above.
AFFORDABILITY CRITERIA
Cypriot banks do not use income multiples to assess the amount an applicant can borrow. Instead they base their assessment on the amount of the applicant’s income which is required to pay off any new borrowing. Banks look at existing commitments in the form of mortgage payments, and in some cases loan payments, and add the proposed new payment to these. As long as the total does not exceed 40% of the applicant’s gross monthly income, it is deemed to be affordable, and will be granted approval.
For more information on mortgages and any other financial issues please contact us at: mortgages@qualitydevelopments.com
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