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,home insurance and car cover in Austria. He can also help with registering a car for you.
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 Buttinger Mortgage advisor
Mortgage updates:
Update for 2023
Mortgages have become even more difficult to obtain and many of the compliances are to do with having a Euro income to support a mortgage. If you have the possibility to be paid in full or part in Euros, this can help overcome one of hurdles.
The other option is to look at properties that can be holiday rented, thereby creating a business model with a Euro income.
Update after 1st August 2022
Higher hurdles for home loans:
What has applied since August 2022
Stricter criteria for granting private real estate loans will come into force. The banks’ compliance with the new standards will be monitored in many ways.
From 1 August 2022, it has become more difficult for some families to obtain a loan to build a house or buy a flat. As then the newly issued Credit Institutions Real Estate Financing Measures Ordinance (KIM-V) of the Financial Market Authority (FMA) and the amendment to the Assets, Earnings and Risk Disclosure Ordinance will come into force.
The FMA thus follows the recommendations of the Financial Market Stability Board (FMSG) to reduce and limit risks in the financing of residential real estate. As reported, the Oesterreichische Nationalbank (OeNB) has been warning for some time due to rising real estate prices as well as the turnaround in interest rates that more and more borrowers could get into payment difficulties because they have taken on too much debt and the income is too low for the future interest burden.
Another risk factor in the construction of single-family homes is the rising cost of construction, which can make financing plans obsolete. The aim of the new measures is to adequately contain default risks, to upgrade risk management in credit institutions and to avoid conflicts of interest.
27th April 2022
Mortgages are getting even more difficult to obtain, and the latest round of regulations certainly does not help.
To qualify for an Austrian bank mortgage, your income must be in Euros and preferably taxed in Austria or EU.
This makes it difficult for overseas buyers, particularly the UK and USA.
Are there any answers?
Well, one could buy a holiday property cash, and this is probably ok for cheap properties under €100,000 but not everyone has available funds to do this. Many families buy a property together and in Austria, up to 4 people can be named on the ownership registration document.
We have found that clients are now moving towards cheaper properties and raising funds in their own countries using their home country property as security for loans. This is probably one of the best methods, particularly when one’s own currency has a higher against the Euro.
It is also easier if buying a property that has an existing income in Euros, such as an apartment house or guesthouse. The banks then are more helpful.
28th March 2021
The mortgage market for overseas buyers has not got any easier, but it remains possible to arrange a mortgage if the property has an income in euros.
2nd Oct 2020
We have successfully been able to arrange the first commercial mortgages from one of the forwarding thinking National banks. One of these was for an apartment house with 4 rental apartments bringing in a good yearly income. This was accepted by the bank as the Euro income required for them to issue a mortgage offer.
15th Sept 2020
Commercial mortgages are now available for Gmbh businesses. If buying an apartment house, guesthouse or hotel, that has an existing income, then it is possible to apply for a commercial mortgage.
22th August 2020
Business Mortgages for foreign citizens now possible.
Getting a mortgage in Austria has always been a problem for foreign nationals.
This financing option is based on a commercial mortgage and has many benefits, as it is more tax efficient. Our Notar can set up a limited company for a property buyer in his/her name. The limited company holds ownership of the property, but of course the buyer is able to use the property as he/she chooses.
This can be for own exclusive use, but is more tax efficient for holiday letting income or business use.
We have set up a special private information page, for our subscribers, to explain the process.
Please email us if you are interested and we can send you a password to access the page. news@amazingaustria.com
Mortgages for Non EU citizens.
Many banks have been lobbying the EU financing industry, for years, to correct the imbalance between mortgages for EU citizens and overseas buyers with a different currency.
The way forward is with commercial mortgages,by setting upa company in Austria…notas difficult as one might imagine..
May 2019:
Generally most banks are now insisting on a residency before considering a mortgage. They are also strictly enforcing the Euro income policy.
A residency can be secondary or it can be a business that is incorporated in Austria.
Many couples buying, decide to have one partner as resident in Austria and the other stays with own citizenship. But remember that the one with Austria residency will pay their taxes in Austria.
Mortgage legislation: on 21st March 16, a new ruling came into force that all income for an Austrian mortgage needed to be in Euros or if from another EU country also with Euro currency.
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.
The mortgage rate fluctuates and at present is around 1.5% or lower, but so to be on the safe side we have given examples with 1.5% interest rate.
The figures are for guidance only and one should get an actual quote for their own circumstances.
Examples based on 1.5% interest rate
Mortgage amount: 50000€ (70% of purchase price - maximum possible) based on 2.25
interest rate: 1,5%
duration: 240 months
monthly installment: 201€
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: 1,5%
duration: 240 months
monthly installment: 303€
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: 1,5%
duration: 240 months
monthly installment: 402€
register tax: 1560€
fee (2%) 2000€ (included in monthly instalment)
bank account cost. aprox: 80-100€ a year depends on bank
Mortgage application
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 or another European country using the Euro, 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!
Alternatively perhaps your employer could pay part of your salary in Euros?
Our mortgage advisor works closely with many banks and an Austrian bank that will offer up to 70% mortgages but the criteria and form filling are extensive.
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% as at March 2019…. 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 an Austrian property mortgage 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 for Austrian property mortgage, 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 an Austrian property 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 an Austrian Property 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.
Also, there is the agents consultancy fee, which is generally 1% depending on size of mortgage obtained.
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 Austrian Property Mortgages.
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?