You fell in love with Croatia and now you want to buy real estate, but you don't know how and you don't have the necessary capital? The good news is that banks today offer various favorable lending models for the purchase of real estate. Home loans are also available to foreigners within the eurozone. Read on and find out how to get real estate in Croatia.
How can foreign citizens buy real estate in Croatia?
If you are a citizen or a legal person from a member state of the European Union, you acquire the right to own real estate in the Republic of Croatia under the same conditions as for acquiring the right to own property for citizens of the Republic of Croatia and legal entities based in the Republic of Croatia, with the exception of real estate located in exempted areas - ownership of agricultural land is determined by a special law. To acquire ownership rights, you do not need the consent of the Minister of Justice and Administration, with a note that citizens and legal entities from the European Union cannot acquire agricultural land until June 30, 2023.
If you are a citizen of the Swiss Confederation, you acquire the right of ownership of real estate in the Republic of Croatia under the conditions that apply to the acquisition of ownership rights for citizens of the Republic of Croatia and legal entities based in the Republic of Croatia, with the exception of real estate in exempted areas - agricultural land is regulated by a special law. You do not need the consent of the Minister of Justice to acquire ownership rights, with the note that when submitting a proposal for registration of ownership to the competent land registry court, you need to attach, along with other documentation, a confirmation of the application for temporary residence.
Foreign nationals from outside the EU, the Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation must request consent to acquire ownership rights of foreign persons over real estate in the Republic of Croatia, and this is decided in an administrative procedure at the request of a foreign person who intends to acquire ownership of a certain real estate or of a person who intends to alienate that real estate, on the condition that you are a citizen of the country with which reciprocity has been established for the acquisition of ownership rights to real estate in the Republic of Croatia. The updated list of countries with which there is reciprocity can be checked on the page https://mpu.gov.hr.
Are you a foreign citizen and need a loan to buy real estate?
Today, banks offer various favorable lending models for real estate purchases, and housing loans are also available to foreigners within the eurozone, that is, to citizens of countries within the European Union that use the euro as their official currency.
The purpose of the loan that can be obtained by a citizen of the euro area who receives regular income in euros in an EU member state that has introduced the euro as its currency is as follows:
• purchase of residential real estate in the Republic of Croatia (apartment, family house including the adjoining garden, residential real estate under construction)
• purchase of apartments, vacation homes and weekend homes in the Republic of Croatia
• purchase of a garage, parking space, garage-parking space and/or storage room, with the condition that the credit user previously or concurrently realizes a loan for the purchase of real estate in the Republic of Croatia
In banks, it is mandatory for the credit user to participate in purchases above a certain amount and in a percentage determined by the bank, which often amounts to at least 30 percent of the purchase price.
The loan amount that can be obtained depends on the total exposure according to the bank's opinion and the amount of the estimated value of the real estate.
In Croatia, PBZ offers housing loans for citizens of the euro area, Erste banka also offers housing loans for foreign citizens and employees abroad.
For example, in Erste Bank, the loan amount is possible from 10,000 to 500,000 euros, with a repayment period of three to 20 years. Loan repayment can be contracted in monthly annuities, installments and instalments. The exact number and amount of monthly annuities, installments or installments depends on the agreed elements of the loan agreement, such as the interest rate and repayment term. When submitting a loan application, the client can also agree on the possibility of early repayment (in part or in full) with additional payments, without charging a fee for early repayment of the loan and without additional costs (for example, the cost of a notary public). After contracting this benefit with additional payments in the amount of more than two installments, the principal is automatically reduced, without coming to the bank, and you will receive information about the new amount of the principal and installments by mail.
At any time, you can submit a written request for early repayment of the loan, in part or in full, without charging a fee for early repayment of the loan.
For example, PBZ offers a loan amount of up to 350,000 kuna equivalent for the purchase of residential real estate in the Republic of Croatia (apartments, family houses, including the attached garden plot, residential real estate under construction).
Each housing loan requires certain insurance instruments. They depend from bank to bank, but for example Erste banka accepts insurance instruments located in the Republic of Croatia. It can also be a statement on the agreement on seizure of income and promissory note confirmed by a notary public, registration of a lien on real estate with the binding of a real estate insurance policy in favor of the bank (the maximum loan amount can be up to 60 percent of the estimated value of the real estate), the apartment that is pledged, or up to 50 percent real estate value if the house is pledged. The bank reserves the right to request additional insurance instruments at its own discretion, and the loan beneficiary must provide part of his own financial resources to participate in the purchase price. In Erste Bank, the participation is at least 40 percent of the purchase price.
Where to start from?
The logical step would be to start by choosing the property you want to buy, but since there is no pre-approval in Croatia at the moment, you enter into a pre-purchase agreement. At this moment, you are entering into a contract without knowing whether you will get a loan and whether you will be able to buy the property, so we suggest that you first check with the bank whether you meet the most important lending conditions, i.e. whether you have creditworthiness.
You will need a real estate appraisal, which some banks offer as a special benefit at no additional cost, but with some, the real estate appraisal is carried out in accordance with the regulations governing real estate appraisals, and the costs of the real estate appraisal are borne by the borrower.
You will also need insurance instruments, which can be a promissory note issued by all participants in the loan (loan beneficiary, joint debtor) and confirmed (solemnized) by a notary public, a lien exclusively on the loaned real estate to an acceptable bank that you have chosen, and a property insurance policy against basic risks for real estate pledged, life insurance policy of the loan beneficiary with a redemption value of 10 percent of the loan amount.
Please note that banks do not accept insurance instruments located or issued outside the Republic of Croatia.
Contact all banks that are of interest to you and arrange a meeting with a banker who will guide you in terms of amounts, terms and conditions. Business conditions may differ from bank to bank, so it's not a bad idea to see what each bank offers.
When you have compared all the offers and found the one that suits you best, it is time to collect all the documents required by the bank and start the adventure of buying the property of your dreams in this wonderful country.