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Getting a mortgage on a property in Croatia

How can I get a mortgage in Croatia? Get the right advice here.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 4th July 2019* | Published: 31st May 2019

We’re often asked about how you can get a mortgage for a property abroad, in particular how to get a mortgage in Croatia. The  process can vary between countries but the key considerations are largely the same. If you want to take out a mortgage in Croatia, then it is possible, but you’ll first need to be aware of what’s involved, including potential risks.

The good news is that we work with expert mortgage advisors in this area who are experienced in recommending a mortgage for a property in Croatia.

In this article, we’ll be covering the following:

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Can you get a mortgage in Croatia?

Compared to other European countries, in Croatia there are more considerations around mortgage lending, but the answer to this question is ‘yes’ nonetheless.

It’s worth noting that the type of mortgages available in Croatia are more limited than those in other European countries. As with all mortgages you’ll also need to meet the criteria of the lender, which we’ll explain more about later in the article.

What is the process of getting an overseas mortgage in Croatia?

Getting a mortgage in Croatia should start with you enlisting the help of an international broker who has knowledge of the country, and we work with experts who fit that bill. Secondly, you’ll need to appoint an independent solicitor, ideally someone based in the UK who is fluent in Croatian or otherwise you’ll also need a translator.

After that, expect to follow this process:

Property reservation

Once you’ve found your property and have agreed a price with the seller you need to put in a ‘reservation.’ This is regarded as your commitment to buying the property. Your solicitor will assist with this procedure.

Preliminary contract

Before you sign the final contract you’ll need to sign a ‘preliminary contract.’ This will make the agreement between the buyer and seller official and at this stage you could be asked to pay your initial 10% deposit. Terms and conditions will also be finalised too.

Permit

All foreigners who buy a property in Croatia need to obtain a permit from the Croatian Ministry of Foreign Affairs. This is largely regarded as a formality, however it can take a while. In some instances, it can take up to two years for your permit to come through. However, you don’t need to wait for it to complete the sale.

Completion

Both you and the seller will be required to sign the contract. It will also be signed by a publicly employed solicitor (known as Notary) whose role it is to ensure your property is registered on the land register. As this stage you’ll also need to pay any outstanding fees

Tax considerations

Budgeting for a property purchase is an important aspect of buying as you’ll need to release funds at various stages. Upon completion of your property purchase in Croatia you’ll need to pay the following...

  • Legal fees
  • A property transfer fee
  • The fee for your permit application
  • A fee for your Notary and possibly their translator, as well as
  • A fee to the land registry

The overall total of these fees could be around up to 7.5% of all your costs.

It’s worth remembering that fees don’t stop here. Depending on where you buy in Croatia you may be asked to pay an annual Holiday Property Tax - this is something your solicitor should flag to you in the initial stages of purchase.

Plus budget for translators. If you’re not fluent in Croatian yourself you’ll need to see all paperwork, planning consents, agreements, contracts and documents in English and this process will incur translation charges.

The benefits of using an international broker

Having an independent broker will mean you have someone who can help you navigate the process of getting a mortgage in Croatia. They’ll have local and cultural knowledge, will know about eligibility criteria and can give you the best advice for your circumstances, recommending the mortgage provider that best matches your needs.

The good news is that we work with overseas mortgage brokers with expert knowledge of the Croatian market. They can offer bespoke advice to customers who are buying in the territory and connect you to the right lender for your needs and circumstances.

Make an enquiry to speak with a Croatian mortgages expert today.

Potential risks to be aware of when buying in Croatia

Croatia is still a relatively new country. It only became independent in 1995 and joined the EU in 2013, so it’s regarded as an emerging economy. In this respect it’s considered less stable than other parts of Europe. So, while there is a government approved policy in place to buy property in the country, they have less experience of the process than other nations do, which is why you may come across hurdles such as delays.

Here are some other considerations:

Land ownership

Land ownership in Croatia is still unclear in some places, so it’s crucial that the history of the land you want to buy is fully researched before you commit. You may not receive your government permit if you can’t prove it isn’t already owned by someone else.

Loan amount

Mortgages for foreigners tend to be more modest than those that are available to Croatian nationals so you may have to invest more of your own capital.

Some borrowers consider re-mortgaging property they already own in the UK in order take out a new mortgage in Croatia.

Currency, exchange and interest rates

One of the key considerations when you’re buying abroad is that your money and property price will be affected by fluctuations in the local currency as this is the currency you’ll be purchasing in. To buy property in Croatia you’ll need a bank account there too.

Bear in mind that interest rates may also be affected by local fluctuations and if exchange rates change drastically it can affect the affordability of a property.

If they fluctuate by more than 20% your lender should inform you. It may in this instance be possible to pay back your mortgage in a different currency so that you don’t fall behind in payments.

Land

If you intend to build on the land you must find out what planning permission and permits are required. It can be difficult to find title deeds and relevant certificates when you’re dealing with authorities abroad. You also need to check that there’s no mortgage already assigned to the land.

Be aware too that as a foreigner you’re not usually permitted to buy agricultural or local forest land or any that is protecting cultural monuments.

Can I get a buy to let mortgage in Croatia?

Buy to let mortgages in Croatia are possible however as part of the mortgage criteria you need to prove you can pay for the property yourself. You won’t be considered if your figures are calculated by using suggested income from the rent you’ll receive. You need to prove that you can buy the property without relying on renting it out.

Croatia mortgage criteria including credit issues

Before you’re granted a mortgage in Croatia you’ll need to show that you meet the required criteria, summarised below.

Employment status

In order to be approved for a mortgage in Croatia you’ll have to show six months of payslips from your current employer alongside six months of bank statements, and show what your general day-to-day outgoings are.

If you’re self-employed, you’ll need to provide two years of accounts that have been properly audited, the previous year’s tax return and 6-12 months of bank statements.

Age

Croatian mortgages tend to have more limitations than those you can find in the UK as there are fewer providers. One of the common criteria is that mortgages aren’t normally available if you’re over the age of 65.

Credit issues

Every mortgage provider has different criteria but as there are less lenders in Croatia (most of them are banks) there are more limitations. If you have credit issues don’t let this be a deterrent. Your international mortgage broker is the best person to speak to about your case as they will know lenders in Croatia and what their specific criteria is.

Make an enquiry and we can refer you to one of our experts who can assist you.

Want to know more? Speak to one of the Croatia mortgages experts we work with

Before you make a decision about purchasing a property in Croatia, speak to an expert who can fully explain the risks and the current situation in the country including economic and political climate.

Like most mortgages, every assessment is based on your individual circumstances and an expert will take these into consideration when they offer you advice.

If you have questions about how to get a mortgage in Croatia and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry.

OMA works with credited advisors who can find you an expert broker who understands the market and already knows the lenders.

So sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 4th July 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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