Property purchase in Austria for Russians. Mortgage lending 2020

Property purchase in Austria for Russians. Mortgage lending

14.03.2020 10:00

Mortgage lending allows buying real estate in Austria. Russian citizens who have confirmed their solvency and connection with Austria have this right. To do that, it is necessary to prove the compliance of the money. In Austria, it’s a standard procedure for all buyers.

A citizen of another country is obliged to submit documents confirming the legality of the funds for real estate purchase. Without the documents, money can be frozen in an Austrian bank, even with a property transaction contract. A foreign citizen wishing to move to Austria and get a residence permit has to have a good credit history in an Austrian bank.

Real estate in Austria is often bought for rent. In this case, a mortgage gives some tax advantages, such as mortgage execution expenses and percentage are deducted from the tax base and significantly or totally reduce the amount of income tax.

Major banks of Austria like ErsteBank Group, Bawag P.S.K., Raiffeisen Group, Oberbank AG, Bank Austria, ING-DiBa Direktbank Austria, Immo-Bank issue a mortgage.

Borrower requirements

Not only EU residents are entitled to apply for a mortgage. Each bank has its specific lending conditions, but there are general requirements. For example, a buyer’s income doesn’t matter but they must have at least €2000 euro after monthly payment (with a condition of not having dependents). The lender’s age at the time of mortgage repayment should be no more than 65 years old. If these conditions are met, it will not be difficult to get a bank’s approval.

Conditions

Austrian banks offer favourable lending conditions, such as low-interest rates (1.8%-3.5% per annum, Euribor + 1.5%) and Euribor 1.5%), and a possibility of early mortgage repayment without penalty. A mortgage is issued for a period of 1 to 25 years.

A buyer makes a down payment of 30% of a property price. In this case, the property is pledged, and the ownership with a charge of up to 100% of a mortgage payment is immediately issued. Initial payment may not be necessary if a buyer already owns a property in Austria. A mortgage can be taken on bail of this property.

Documents

The list of documents to obtain a mortgage in Austria for a Russian citizen:

  • An international passport, its copy.
  • A copy of a property transaction contract.
  • A document confirming income (a salary certificate or a company’s income confirmation). A company owner is required to present an income tax-2 certificate in German.
  • A company Austrian registration statement from the trade register (if a mortgage is issued on behalf of the company).
  • A profitability calculation, compiled by a management company or a tax consultant, if a property is bought for lease.
  • Other documents proving buyer’s solvency (contract for an expensive real estate sale, a bank certificate where a buyer keeps their savings).

Russian citizens need to translate all the documents into the German language using a professional translation agency service and seal them by a notary.

Sometimes a legal entity buys a property that is registered in Austria only for the purpose of this purchase. This kind of company has quite a low income, so the owner will have to prepare documents on other sources of income. One can get a mortgage for new company projects. In this case, the bank will require a detailed business plan of these projects.

After receiving an application and documents, the bank will make its decision in 2-3 weeks.

Additional expenses: 

  • a bank fee of 1-3% (the amount depends on the complexity and mortgage amount);
  • an agency fee for finance agents (up to 3% of the mortgage);
  • registration in the Land Book of Loan Conditions (1.2%);
  • property examination fee 0.5%-0.8% of the mortgage (in some banks).
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