How to get a mortgage in Croatia if you are a UK resident
Getting a mortgage for an overseas property can be daunting, but it doesn’t need to be, so if you’re looking to take out a mortgage for a property abroad, in particular in Croatia, this guide is for you.
Mortgage processes can vary in different countries, but the fundamental considerations are typically the same. If you’re considering getting a mortgage in Croatia, you’ll need to know the process, including the potential risks.
So, if you’d like a smooth and stress-free experience, read along to learn more about Croatian mortgages.
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Can I Get A Mortgage In Croatia?
In short, yes, you can. However, there’s more to consider with mortgage lending in Croatia compared to other European countries. It’s also worth remembering that the mortgage types available in Croatia are pretty limited.
But, as with any mortgage in any country, you will need to meet the criteria of the mortgage provider, which we’ll cover in more detail below.
What Is The Mortgage Process In Croatia?
The process of getting a mortgage in Croatia starts with hiring the services of an international broker who has extensive knowledge of the country. Next, you’ll need an independent solicitor, ideally a UK-based person who can speak fluent Croatian.
If this isn’t possible, you’ll need a translator. Once you’ve done these first two steps, the process is as follows:
Property reservation
Once you’ve chosen your new property and have negotiated the price with the vendor, you’ll need to put a “reservation” on it. This is to show that you’re committed to buying the property and your solicitor can help you with the procedure.
Preliminary contract
Before the final contract is signed, you’ll be required to sign a “preliminary contract”. This is to make the agreement between you and the seller official. You may also need to pay your 10% deposit at this stage, and the terms and conditions will be finalised as well.
Permit
Foreigners who purchase properties in Croatia need to have Croatian Ministry of Foreign Affairs permits.
This is mainly a formality, but it can be a lengthy process. Sometimes it can take two years for the permit to come through. Fortunately, you don’t need to wait until you have the permit to complete the property sale.
Signing the contract
Lastly, you and the seller will need to sign the contract. A publicly employed solicitor, called a Notary, will also sign the contract. The Notary’s role is to make sure your property gets registered on the land register. In this last stage, you’ll also need to settle any unpaid fees.
Advantages Of Using An International Broker
An independent broker can help you to navigate the Croatian mortgage process as they’ll have cultural and local knowledge.
They’ll also know the eligibility criteria and will be able to provide you with advice tailored to your circumstances, recommending a provider that’s the best match for you.
Risks When Buying Property In Croatia
Croatia is considered to be a country that’s less stable than other EU countries as it’s still relatively new. It only become an independent country in 1991 and became part of the EU in 2013, so it’s considered an emerging economy.
Although there is a government-approved property buying policy in place, they’re less experienced than other nations are. For this reason, you may face hindrances such as delays. Below you’ll find some other potential risks.
Loan amount
Mortgages taken out by foreigners are usually more modest than those given to Croatian nationals. Because of this, you may need to invest more of your own money.
Borrowers sometimes remortgage properties they already have in the UK to allow them to have a Croatian mortgage.
Land ownership
Land ownership in Croatia is still a bit unclear, so it’s essential that you fully research the history of the land you’ll be buying before you commit to it. If you can’t prove that the land isn’t owned by anyone else, the government may not give you your permit.
Exchange, currency, and interest rates
When you’re buying a property abroad, a key consideration is that your money and the property purchase price will be affected by local currency fluctuations. You’ll also need a Croatian bank account to buy property there.
Keep in mind that the interest rates and the mortgage loan rate might also be affected by local currency fluctuations. If exchange rates change substantially, it may affect the property’s affordability.
Planning permission and permits
If you want to build on your land, you’ll need to have the relevant permits and planning permission. Finding the right certificates and title deeds can be also tricky when dealing with overseas authorities.
What are the Tax Considerations for Buying Property in Croatia?
Budgeting for your property purchase is an essential step as you’ll be required to pay funds at different stages. Once you’ve completed the sale of your Croatian property, the following fees will be payable:
- Property transfer fee
- Legal fees
- Land registry fee
- Permit application fee
- Notary and possibly translator fees
Will My Residency Status Make a Difference?
Yes, before your mortgage is approved, the Croatian bank will want assurance that you’ll pay them back. If you’re a temporary resident, you probably won’t get mortgage approval.
You’ll likely be refused since you don’t have a long-term connection with the country and will be viewed as high risk. Banks always prefer Croatian citizens or those with permanent residencies when issuing mortgages.
What is the Mortgage Criteria in Croatia?
Before you can be approved for a Croatian mortgage, you’ll need to meet the criteria, which you can find below.
Age
Mortgages in Croatia typically have more limitations than UK mortgages because there aren’t as many lenders. A common criterion is that you can’t usually get a mortgage if you’re over 65 years old.
Employment status
To be approved for a Croatian mortgage, you’ll need to show payslips from your current employer from the last 6 months as well as 6 months’ worth of bank statements. You’ll also need to show what your general outgoings are.
Credit Issues
Each mortgage lender has different criteria, but because there are fewer lenders in Croatia, the limitations are greater. But, if you have bad credit, it doesn’t automatically mean you can’t get a mortgage.
An international broker can help you as they will know Croatian lenders and their specific criteria regarding bad credit mortgages.
Speak to Loan Corp for Croatian Mortgage Advice
Before you decide to purchase a Croatian property, we recommend you discuss it with an expert who can tell you about what’s happening in the country, such as the political and economic climate. The expert can also explain any potential risks to you.
Like any other mortgage, the assessment is based on your current circumstances, and these will be considered when you’re offered advice.
If you have any questions or queries on getting a Croatian mortgage and you need expert advice, don’t hesitate to call LoanCorp on 0808 301 9509. Alternatively, you can fill out our online form with your query. Our qualified specialists will be more than happy to help you so you can have a hassle-free mortgage experience.
FAQs
Can I get a mortgage in Croatia?
Yes, according to the Croatian law on housing consumer credit, mortgage loans can be taken out for:
- A family apartment or house meant for housing or as a holiday rental.
- Land that you plan to build a property on.
- A garage or parking space which you purchase along with the property.
Although there are more limitations around mortgages in Croatia than in other countries in Europe, it’s perfectly doable. However, keep in mind that you probably won’t have the same range of mortgage types in Croatia as you would in the UK.
Can English people buy properties in Croatia?
Yes, UK citizens who live in Croatia with temporary or permanent residences, under EU law, have the right to buy property under the current regulations. This means that UK citizens have the same rights as EU citizens.
Where is the best place in Croatia to buy a property?
Although this depends on your personal tastes and budget, a popular location for buying a Croatian property is Dalmatia. This region boasts some truly stunning scenery unlike anywhere else in the world.
The dramatic landscape of Dalmatia features beautiful fishing villages, beaches, vineyards, crystal-clear waters, and lush islands. Plus, the weather in this region of Croatia is some of the best you’ll find in Europe.
The sunshine hours are also amazing in Dalmatia, with Hvar island boasting more than 2750 hours of sun each year. This is more than anywhere else in this corner of the world, and the whole region enjoys an average of 2650 sunshine hours every year.
What is the difference between a mortgage loan and a housing loan?
Mortgage loans are when a property is used as an insurance instrument, for example, as collateral to access a certain amount of money.
On the other hand, housing loans are loans used to purchase a house or apartment, construct a new house, or renovate an existing apartment or house.
Looking for an overseas mortgage in another country?
We can get you mortgages in the following countries:
- Mortgages in Cyprus
- Danish mortgages
- French property mortgages
- Italy mortgages
- Germany mortgages
- Mortgages in Spain
- Mortgages in Turkey
- Poland Mortgages
- View all overseas mortgage countries
Final Thoughts
In summary, buying a property in Croatia is completely doable for UK citizens. Although there are more limitations, with planning and help from an expert, you can make your dream home become a reality, start online below:
References
https://www.firstpropertycroatia.com/blog/where-to-buy-property-in-croatia/
https://www.expatincroatia.com/11-things-to-know-getting-mortgage/#10