Bank Loans

  • Banks prefer to loan to clients that they know are reliable
  • If you are non-EU, this will be more difficult, so if you can, buy your first property outright.
  • You will usually get up a loan of up to 80% of the price/completion price of the property while locals get 90%.
  • Your qualifying monthly repayments of the loan will be capped at 30% of your gross income
  • Repayment terms can be calculated up to a period of 40 years, but the norm is 25 years. The shorter (if you can afford it) the better.
  • Your age will play a role in the qualification process. The loan has to be paid by the age of 60.

Good to know

  • You will be able to choose between a fixed or flexible interest rate, but keep in mind that if you choose the fixed option, you at least will always know what repayment you are in for.
  • The downside is that this fixed rate will never go down even if the central bank decides to lower national rates.
  • On the other hand, should you have opted for a flexible rate you will benefit from a lowering in the interest rate, but also have to pay more should the interest rate escalate.
  • Many wise buyers have opted for a fixed interest rate in order to facilitate proper personal financial planning and forecasts for the year.
  • Always make sure you can afford the repayment and budget properly for it. You need to have at least six months’ worth of instalments saved in case you need it for unforeseen events related to the property and always make sure that you have a guaranteed chance of renting the property out for more than what the bond repayment amount will total to each month.
  • Remember that if you are planning on doing short-term lets (shorter than 6 months at a time) or run the property as a business, you will also have to pay tax on the income generated.
  • Another plus point is that the longer you keep the property, the better the chances are of capital appreciation on your investment, so over a couple of years it will be worth more than what you bought it for, given you have bought wisely.
  • Lastly, we encourage those who finance a property with a loan to put in additional cash whenever they can, as this will not only shorten the repayment period but also bring the outstanding amount the interest is calculated on, down.