Financing A New Home In Hungary And The Related Costs
If you have found your dream home or other property in Hungary and are ready to make the purchase, you should know how to get the best financing as well as other costs that are associated with setting up your new home. While there are some similarities in making a home purchase in the United States, there are also some differences that you should be aware of before you take the plunge and purchase real estate in Hungary.
Typically foreigners do not get mortgages from Hungarian banks. It is possible to obtain a mortgage from a Hungarian financial institution as a foreigner, but it is not the norm. Usually foreigners discover that they are able to obtain mortgages with better terms in their home country. And by better terms I am referring to possibly lower interest rates or reduced commissions and charges. Since so few foreigners actually seek financing through a Hungarian lending institution, there are not a lot of banks providing loans that are tailored for expats. There is one bank, CIB Bank, which targets the expatriate market segment specifically, so if you are interested in getting a mortgage in Hungary that would be a good place to get information from.
If you do decide to apply for a home loan in Hungary you might be surprised to find that Hungarian banks do not give loans on the basis of the borrower’s income. Instead, the amount of the loan is determined upon the value of the property that is being purchased. Typically you are allowed to borrow up to 60% of the property’s value. This is one reason foreigners seek funding elsewhere, because they are able to borrow more money against the property.
If you get a mortgage from a bank in Hungary, you can expect a term between 1 and 35 years. The total credit fee ratio that you will be charged should be between 6 and 7 percent.
It is important to consider the other costs involved in paying for a property purchase in Hungary, such as insurance and utilities. To help you determine the best deals in finding or financing your new home, it is important to seek help from professional surveyors such as surveys northeast. With all the reliable and helpful data that they have, they can guide you effectively towards your goal in owning a new home.
If you have a mortgage then you are required by law to have insurance on the property. If you do not have a mortgage then you are not required to have insurance, but it is advised. The cost of utilities will vary, but you can use the following as a guide for one person: gas for the month at 94 Euros, electricity for a 3-room apartment around 50 Euros, water for the month around 35 Euros, trash pickup for the month around 30 Euros and cleaning service for the month around 5 Euros. If you are buying your property to rent out, you can expect the fees for the rental agent to be about 20% of the rental income.
Using the above costs associated with owning property, you should have a good idea of how much home you can afford.