Finance

If you need a mortgage, you have the choice of arranging a remortage or specialist mortgage for foreign purchase in the UK, or arranging one in Cyprus.

At present, many investors opt for a mortgage arranged in Cyprus and have the option of getting a foreign currency mortgage to reduce costs. For instance a Swiss Franc mortgage has an interest rate several percent lower then a UK or Cypriot mortgage. Against this, you should take into account the costs of converting the whatever currency you are paying (eg GB or Cypriot pounds). There will be administration charges applied by the bank, so you should ask your lender for a precise breakdown of the cost to you whatever mortgage you decide on.

The maximum loan you can have is a percentage of the valuation of the property (loan to valuation, or LTV). At present, there are still some schemes where you can get a 20% LTV, which reduces the amount you have to put down as a deposit. However, recent changes required by the Central Bank of Cyprus – which regulates bank lending, has resulted in the LTV reducing. So a purchaser now has to find between 30% to 40% of the valuation depending on the individual’s circumstances.

It is commented that this move has been introduced as a measure to prevent the type of over heating that has happened in the Spanish property market, where in certain areas supply has radically exceeded demand, and has led to a partial collapse of the market. So in the medium term, it is a good move for the investor and home buyer.

The lenders in Cyprus will be the banks – Laiki; Bank of Cyprus; Emporiki; National Bank and Hellenic Bank are the main players. They offer a variety of mortage types, not as diverse as in the UK. It can be easier to obtain a mortgage in a new build project, from the bankers who are financing the developer. Your developers will advise you on this. You should be forward in asking about all the options available to you, as sometimes the banks do not advise you as comprehensively as they could.