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Thursday 16th July 2020
Home News Loan financing further reduced for Cyprus property buyers

Loan financing further reduced for Cyprus property buyers

THE Central Bank of Cyprus has stepped in once again to reduce loan financing for those buying property in Cyprus.

In October last year the Bank reduced financing from 70% to 60%; but in spite of this move, housing loans continue to surge, reaching a record €8.26 billion in January this year.

The new measures will affect the sale of new and resale property, but it’s too early to assess their long-term impact.

Last years measures by the Central Bank reduced loan financing for property purchases from 70% to 60% for non-residents. The new measures restrict the amount that can be borrowed even further by excluding VAT and Property Transfer Fees from the mortgage loan calculation.

For example, for a property priced at €350,000 exclusive of VAT, the maximum loan a non-resident can expect to borrow from a Cyprus bank is €210,000. In addition to the difference, €140,000, a buyer will need to find the VAT, €52,500, and the Property Transfer Fees, approximately €21,165, from elsewhere.

So a non-resident buying a property in Cyprus priced at €350,000 will have to find more than €213,600 from other sources; that’s more than 60% of the acquisition cost.

Non-residents planning to make their permanent home in Cyprus are now required to provide evidence that they will live in the property for at least 183 days/year. For those who are not already permanent residents of Cyprus, this condition will be difficult, if not impossible, to meet.

But for first-time buyers who are resident in Cyprus and able to prove that they’ll live in the property for at least 183 days/year, the situation is better; they will be able to borrow 80% of the purchase price (excluding VAT and Property Transfer Fees). For a property priced at €350,000, a resident property buyer will have to find approximately €143,700 from other sources; around 41% of the acquisition cost.

It is essential that buyers take independent legal advice before signing any papers or handing over any money and to budget for the legal fees associated with buying property in Cyprus.

(Note. The Property Transfer Fees above are calculated on the basis of an individual buying a property in Cyprus. If the purchase is made in joint names, the Property Transfer Fees will be lower).



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