How much can I borrow & what proof of income is required?
Please note, that there are no non-status/self-certification mortgage facilities available in Cyprus, but lending schemes are now available on a case-by-case basis based on Income only – see affordability calculation below - and does not include existing or new Liabilities.
All full status loans need to be supported by a minimum requirement of proof of income, i.e. if employed - copies of your last three month's pay slips & copies of your latest P60/Employer’s Reference together with copies of your last 6 month’s Personal Bank Statements will be required or alternatively if you are self-employed - copies of your last three years Audited Accounts (or possibly by Accountant’s Letter & Personal Tax Returns) & copies of both your last 12 month's Business and last 6 month’s Personal Bank Statements will be required on application.
Unfortunately in Cyprus the Lenders will NOT take into consideration any proposed Rental Income from the property for mortgage purposes/repayments (although renting out your property is permitted).
Your loan is based on your joint net “take home” pay and is calculated on an affordability basis. All your existing liabilities including any mortgage/rent payments, personal and bank loans, credit cards (if the balance is not cleared on a monthly basis) and any maintenance (ie: Divorce) payments together with your proposed Cypriot mortgage payments must not exceed between 35% of your net monthly income or 45% of your gross monthly income – dependant on the final lending scheme.
EXAMPLE BASED ON 35% OF NET MONTHLY INCOME:
Net joint monthly income £ 2,500 times 35% of that figure is £ 875 minus existing monthly mortgage payment £ 300 – No other liabilities. This leaves a balance of £575 for a proposed Cypriot Mortgage payment.
EXAMPLE BASED ON 45% OF GROSS MONTHLY INCOME:
Gross joint monthly income £ 2,500 times 45% of that figure is £ 1,125 minus existing monthly mortgage payment £ 300 – No other liabilities. This leaves a balance of £ 825 for a proposed Cypriot Mortgage payment.
Guidance notes for purchasing a property in Cyprus
1) Please ensure that you will have full title to the property on completion and that the appropriate documents are available for the lender.
2) With new properties, find out the date the property will be registered in your name(s), as the lender cannot lend on the security of the property until it has been registered.
3) Whilst all reasonable steps will be taken to secure the loan on your overseas property as soon as possible, delays may occur due to the Cypriot legal and administration system.
4) Check with the estate agent/lawyer that you are aware of the costs charged by the legal & government authorities for purchasing a property in Cyprus, noting that the lender will have their own legal costs for assigning the loan (the cost of which they will normally advise when they issue the mortgage offer).
5) It is essential that you take the appropriate independent legal advice before signing the sales contract or paying a deposit, if purchasing a foreign property, as would be expected if you were purchasing in your own country. The bank will require a copy of this document to be forwarded with the relevant application form. However you are able to sign this contract with the clause “subject to mortgage finance” as the contract, once signed is legally binding.
6) Please be aware that the Lawyer/Notary may be incorporating within his charges, costs for assigning the mortgage and you should establish with the lawyer/Notary the actual cost before proceeding with a loan application.
7) It is advisable to arrange your mortgage finance before agreeing to purchase a property.
8) A Cypriot bank account will be required.
9) Mortgages may have to have a suitable life assurance policy assigned to the lender.
10) Properties can be purchased either individually or in joint names.
11) Please note that there will also be a Government Mortgage Registration fee of approximately 1 % and a Government Stamp Duty of up to 0.20% payable when the loan is eventually registered by the Lender against the Title Deeds
12) If the property is being constructed or if the Title Deeds and Registration in your name(s) has not taken place - The Lender could also charge between 0% and 1.80% of the loan, if they require a Bank Guarantee from the Developer - Please check with your Cypriot Lawyer and Developer
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