Mortgage loans: what you need to know

You want to take a big step and buy a home in Greece, but you're wondering if you're eligible for a mortgage. The process of obtaining a loan can be quite complicated and time consuming. If you are not well informed, you may fall into many traps and make wrong decisions by choosing, for example, a high interest rate.

First of all, the criteria which determine if you meet the conditions to get a loan in Greece are your income, your credit rating, and the value of the collateral. You will need to declare sufficient income and confirm that you have no past loan obligations delay.

The loan amount cannot exceed the 80% of the commercial value of the property and depends on the terms of the loan, such as whether the loan concerns the acquisition of a first home or not, guarantees and collateral, and the repayment period.

The duration of the mortgage loan is determined by the installment you can repay each month and the type of interest rate. At the end of the loan, the first borrower's age must not exceed 75 years, a criterion which is object to change from bank to bank.

The interest rate of the loan can be fixed or fluctuating. The former remains unchanged for an agreed period of time, while the latter is based on the Euribor reference rate plus a margin, which remains constant throughout the loan duration. The final rate of interest varies depending on the amount and duration of the loan, the loan-to-value (LTV) ratio depending on the total purchase price of the home and the terms of each bank.

Banks are offering the option of combining fixed and fluctuating interest rates. For example, a mortgage loan package can be fixed for 3.5 or 10 years which then becomes fluctuating for the remaining duration of the loan.

In each contract, there is also an analysis of the payment of installments by capital, interest and other charges for the period of validity of the fixed rate on fixed rate loans, as well as the amount of default interest and the method of calculating the interest.

Usually, the supporting documents required are a photocopy of the mortgage holder’s ID or passport, a photocopy of the tax clearance note and a payroll remuneration certificate (and the guarantor’s) for employees. You would also need the title deed, building permit, topographical diagrams, and a floor plan for the engineer.

In most cases, the amount of the loan and interest rates as well as the terms under which a mortgage loan is obtained differ from bank to bank and from borrower to borrower. In order to decide which mortgage loan is suitable for you, it would be advisable to consult a financial advisor or loan advisor to select the most advantageous terms for you. A consulting company can be the intermediary between the borrower and the bank to facilitate the process of applying for a loan and to achieve more favorable terms for the mortgage holder. It evaluates your credit rating for free and is paid exclusively by the banking institutions at no cost to you, whether the disbursement process is completed or interrupted at any stage of the process.