Austrian Property Mortgages

Our Austrian Mortgage advisor is

Gerald Buttinger

For Austrian property mortgages our property Professional is Gerald. He has many years experience in the financial services and home insurance cover in Austria.  He works with most Austrian Banks and financial institutions to get the best Austrian property mortgage offers for our clients. He speaks English, so you can be assured that your requests are dealt with in either native German or English.

Gerald photo

 

Mortgage updates:

July 2017:

Generally most banks are now insisting on residency before considering a mortgage.

Mortgage legislation: on 21st March 16, a new ruling came into force that all income for a mortgage needed to be in Austria and therefore taxed in Austria.


For Austrian property mortgages. Here are a few example mortgage amounts to give an idea of the costs involved and the monthly payments you would need to make.

Examples based on 2.25% interest rate

Mortgage amount: 50000€ (70% of purchase price - maximum possible) based on 2.25
interest rate:          2,25% 
duration:         240 months
monthly installment:    263€
register tax:           780€
fee (2%)          1000€ (included in monthly instalment)
bank account cost.           aprox: 80-100€ a year depends on bank

Mortgage amount: 75000€ (70% of purchase price - maximum possible)
interest rate:          2,25%
duration:         240 months
monthly installment:    389€
register tax:           1170€
fee (2%)          1500€ (included in monthly instalment)
bank account cost.           aprox: 80-100€ a year depends on bank
Mortgage amount: 100,000€  (70% of purchase price - maximum possible)
interest rate:          2,25%
duration:         240 months
monthly installment:    519€
register tax:           1560€
fee (2%)          2000€ (included in monthly instalment)
bank account cost.           aprox: 80-100€ a year depends on bank
mortgag applic pic

Can I get a Mortgage for property in Austria?

New European rules and regulations are making obtaining a mortgage difficult.
The Basel 111 agreement is one of the main causes.
“Basel III” is a comprehensive set of reform measures in banking prudential regulation developed by the Banking Supervision to strengthen the regulation, supervision and risk management of the banking sector.  These measures aim to:

  • improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source
  • improve risk management and governance
  • strengthen banks’ transparency and disclosures.

So, we guess banks are holding onto more of their cash, to allow for rainy days!!

For mortgages, in Austria, this has translated as:

If the income for repayments to a mortgage is not available in Austria, and is from overseas, it causes a risk problem, and most banks will refuse a mortgage or offer a much smaller loan percentage %. But there are a few banks who will make a larger loan on property to UK citizens.

This requirement for an income in Austria, leaves the buyer with the option of buying a property to rent for income.  This income can then be used for commercial mortgage loan purposes. The downside is that commercial mortgages are more expensive and more hoops to jump through!

Our mortgage advisor works closely with one Austrian bank that will offer up to 70% mortgages but the criteria and form filling are extensive.

Here is a guide to their criteria:

Please answer the following questions:

-how much money do you need for a mortgage–the total sum to be borrowed.
-desired duration of the mortgage
-proof of own resources e.g savings with which you can show that you can pay the difference between the purchase price (including buying costs) and the mortgage.

-assets e.g.:    -existing mortgage documents which show your monthly repayments
                        -purchase contract or land register of your property in UK
                        -fotos for your own property in U.K.
                        -Do you own other properties 
                        -savings
                        -funds/stocks & shares
                        -rental contracts if existing to show income.

-what is the intention for buying this property (holiday use, renting, retirement?)
-personal data (name-adress-family status)
-Austria property data (excerpt of land register–Property details sheet and floorplan)
-passportcopy, this can be scanned and sent as PDF.
-income situation (confirmation of income e.g. P60–any personal loans- exisiting mortgages etc.
-curriculum vitae, a little information about you and your employment.

Other financing possibilities

What else can one do?  a good option is to borrow against an existing UK property to make a purchase…particularly for the cheaper properties in Austria. This puts you in the position of cash buyer!  So, with cash you are generally in a better negociating position.

If the property is an old one for renovation, then if bought outright, an Austrian bank would be happier to lend the funds for any renovation.

The other choice that buyers are making is to share a property purchase, with family members and friends.  There can be up to 4 owners registered to a property in Austria, so this means each would have 25% investment in the property.  If the property is rented for holidays, particularly a chalet house, then the income can be over 20,000 euros a year…so a good return on a family and friends investment plus they get free holidays!

You can get a quote more or less immediately, but to have a firm fixed mortgage offer you would need to complete a few forms and supply, copy of passport, P60 to confirm income or if self employed accountants confirmation of income.

 

For Austrian property mortgages the interest rates are around 2% and 2.25% as at March 2017. a 20 year term is typical, but you can get up to a 30 year term.
 Austrian Banks are more logical when it comes to age and getting a mortgage. Instead of thinking.. the mortgage must be paid off before reaching a certain age. The Banks know that, should you default, they have first call on the property as their mortgage to you is registered in the Grundbuch. This is the register in the local court for the area and shows everything about a property and any outstanding debts against it.

Rate Offers

At times some of the local banks have promotions, offering mortgages at a special introductory rates…sometimes as low as 1.95% for the first 6 months.

Fixed rates

Normally your Austrian property mortgages offer the interest rate is fixed for first year.  So, at least you  know there will be no  nasty increases for a long while.  You can of course get fixed rate mortgages but the interest rate tends to be higher. If you want to have a fixed term, we can get a quote for you.

 Valuation of a property

It is usual for the Austrian Banks to send one of their managers or mortgage advisors to make a valuation for the property, this is free of charge. They are looking for any risk factors should they decide to offer a mortgage.
Generally this is based on would they be able to resell the property quickly at auction if the mortgage is defaulted!  From this valuation they will offer a percentage of what they feel comfortable to lend against the property.

 Agreeing a price

If you or we on your behalf have already negotiated with a seller and agreed a price for the property.  The bank, once they have considered the risk factor should generally offer a certain percentage of this agreed purchase figure. But they may not offer the full amount you need for the purchase!
So we would always recommend that you arrange your own finance or Austrian property mortgage before making offers. We can advise and help with this, as  it takes a week or two to get a full offer of finance.
To have an approved and guaranteed mortgage offer you will need to complete the application process. Again this is pretty straight forward.

 Mortgage Fees

There is a set up fee for a mortgage and this tends to be  2% of the loan value. Unlike UK banks the cost is not hidden in the interest rate, but set out on your mortgage offer. It is effectively added to the loan.
Be aware then that when it comes to the amount of Austrian property mortgage transferred to the Notar for you, the fees and tax on the mortgage will have been deducted..typically a 100,000 mortgage will have bank and tax costs of around 3,500 euros.
For Austrian property mortgages, some Banks are also able to offer the first year with no monthly payments and you just pay the interest due on the loan amount each quarter.

Is it possible for me to obtain an extra mortgage amount for additional or renovation work to a property?

 

Yes, for Austrian property mortgages, many lenders will advance finance based on the finished value of the project. But they will only release money from your mortgage account on production of invoices for the work undertaken.  So if you want to convert a loft for more rental space the bank would release money to the builder on his invoice.
Gerald is the experienced Austrian Mortgage & Financial Advisor on our team, who can advise you about Mortgages in Austria.

Our mortgage advice service is free and you are under no obligations.

Rules and regulations for Austrian property mortgages, are always changing and we would always advise that you check current and up to date changes.

We are here to help make your purchase in Austria as simple as possible.  Please email us if you would like to know more?

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