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Working with the overseas markets we are often asked about the possibilities of property purchase financing in Croatia for non residents. Much to our regret, the answer to this questions comes to a very simple reply - there aren´t any.
It is normal that every newcomming market takes cash initially. As the time passes by and the market gets stronger, international investors and developers appear, offering mortgages for their projects, in cooperationship with domestic banks. Following such examples, local banks soon create similar loan offers. Many people have assumption that such loans are related with transparency and maturity of the market, but the truth lies in a combination of different factors. If majority of the banks on particular market are in the foreign ownership, they often get onto debt on international markets and any placement of the loan in another country is more expencive than those which could be obtained in the country of the buyer´s residence.
Croatia is not a newcomming property market anymore. However, due to individually based construction, there is a lack of international investors and developers that would force the financial market to create the products which would accompany them. Being based on individual purchases by non residents, Croatia is simply not the kind of market where the banks would want to create such products, as it would not bring them much income for the effort they would have to put in. This situation is to change in the near future, most likely once the country joins European Union, for obvious reason: other banks in EU will offer such mortgage lines that would be a direct competition to Croatian banks. Therefore domestic banks, threatened by the more competitive market, will be forced to implement loans for non residents.
The only attempt so far has been made by London subsidiary of Hypo Alpe Adria bank, allowing loans to UK citizens buying a property in Croatia, but only on a company route (not on a private route). This concept pretty much failed in practice as many UK buyers want to purchase on a private route. Moreover, a property which is an assest on the company, has to be used in commercial purposes and therefore is quite inconvenient for those looking for a second home.
While we strive to change the current situation, we do understand the buyers who do not want to get rid of all their cash. On the other hand, do not forget that once Croatia becomes a member of EU and financing possibilities appear, prices will not be so affordable. It´s the risk that each one of you has to take and decide about their priorities. Moreover, mortgages in Croatia have always been (and will remain as such, once they become available to the foreigners) traditionally attached to euros, and it is less likely that any domestic financing will be available in pounds, which would make significant losses for UK clients anyway, concering the consistent decrease of the pound´s value.
Many people have succeed to manage their personal finance and bought property in Croatia without additional financing, so it is time for you to reassess your options. |
