Getting a mortgage in Greece as a foreigner
Are you a foreigner looking to get a mortgage for a property in Greece? Here’s all you need to know including conditions, requirements, and documentation.
Greek real estate market
Greece is a place fit for the gods, from its rich history, ancient architecture, and cultural landmarks. As the home of modern-day democracy, philosophy, science, mathematics, literature, and the Olympic Games, it’s a place of countless innovations and contributions. Paired with its beautiful scenery, sunny climate, and Mediterranean diet, Greece is a top choice for anyone looking for a slow-paced, intellectually stimulating, and active lifestyle. Its thousands of islands provide plentiful opportunities for people to find their own piece of paradise.
Greece is also teeming with profitable real estate investment opportunities. According to PwC in their 2022 emerging trends report, Athens was predicted to have the largest growth in real estate prices in all of Europe. Across Greece, the long tourist season from April to October creates a high demand for short-term rental properties. With a stable, pro-business government, the country is quickly recuperating from the pandemic and the 2008 economic crisis with major construction and renovation projects underway. However, buyers and investors can still take advantage of relatively low real estate prices, especially when compared with other European Union (EU) countries. Given Greece's tumultuous economic past, you should keep in mind that banks are less willing to offer mortgages to citizens and foreigners alike. Around 80% of property purchases are financed with cash instead of mortgage loans, but in recent years Greece has seen an increase in the mortgage market that’s expected to continue.
When calculating your budget, you should also bear in mind the fees and taxes that you’ll have to pay. Mortgage and other transaction registration costs are typically around 10-15% of the purchase price. The transfer tax required depends on the size and value of the property but is typically around 3%. Greece has relatively high property taxes compared to many other EU countries. The main property tax in Greece is the Eniaios Foros Idioktissias Akiniton (ENFIA), an annual tax that’s calculated for all real estate properties. It’s worth finding out if your country of citizenship has a tax treaty with Greece so you can determine if income from an investment property will also be taxable in your country.
There’s no shortage of beautiful cities and regions where you can buy property in Greece. You could consider a mainland location, like Athens, Thessaloniki, or Peloponnese, or opt for an island destination. Whatever lifestyle you’re craving can be found on one of Greece’s islands, including Mykonos, Santorini, Zakynthos, Corfu, Rhodes, Naxos, Paros, Antiparos, Kefalonia, Crete, and Milos. For investment properties, you’ll likely have a higher potential yield on smaller islands like Santorini. You’ll also want to keep in mind the accessibility of your location since many places rely on ferry services that may be canceled in the event of bad weather or have timetables that vary by season. Areas near military bases and national borders are restricted and require extra documentation and permission from a local council. You should avoid these regions when choosing a property, especially if you’re a non-EU national.
Lending conditions
Other than the area restrictions described above, there are minimal restrictions for foreigners when it comes to buying property in Greece. If you’re a non-EU resident, you may be required to provide the Ministry of National Defense with a written form that proves your relation to Greece or substantiates your intent to buy a property in Greece. Since many banks have a large number of bad loans from past years, if you really want to take out a mortgage from a Greek bank, you should find the largest companies that have good reputations. These banks will be the most likely to consider lending to foreigners but you may still need to do extra shopping around to find a willing lender.
In the past, variable-rate mortgages were the most common loan type offered in Greece; however, since 2020, fixed-rate mortgages have become increasingly popular. Over 55% of new mortgage loans in 2022 were fixed-rate loans. The number of new housing loans increased by 20.7% in 2022, but still remains at low levels, and the 2022 annual average mortgage rate was 3.1%. On the bright side, banks are generally willing to offer lower loan amounts with the average mortgage being only €70,000, but this is often not available to foreigners. Most Greek banks and lenders have specific conditions when it comes to mortgage loans.
Here are the mortgage loan conditions that borrowers must meet:
Applicant must be 25 years of age or older and must pay back the mortgage in full by the time they are 58 years old.
A minimum loan amount of €10,000-20,000. It may be higher for non-residents.
A loan-to-value (LTV) ratio of up to 80%.
Typically, an LTV ratio of 70% with a corresponding 30% down payment.
For non-EU residents, the LTV ratio could be as low as 50% with a corresponding 50% down payment.
The average LTV for new mortgage loans in 2022 was 62.9%
A loan term of 6-30 years, typically less than 25 years.
Liabilities (aka debt-to-revenue ratio) must be less than 30% of your household income. This includes any rent, mortgages, loans, and other regular expenses.
The Greek government has made considerable efforts to bring in foreign investors in order to bolster the property market. The Golden Visa Program started in 2014 and has some of the most favorable conditions when compared to similar programs across EU countries, such as Spain. The Golden Visa Program gives real estate investors that buy a property of €250,000 or more the opportunity to obtain permanent residency. You could also qualify through multiple real estate investments with a combined cost of €250,000 or more. As part of the EU, investors can permanently reside in any EU country through a Greek Golden Visa.
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The Golden Visa is a program within the reach of many prospective property buyers and investors in Greece. Over 25,000 foreigners have gotten residence permits since the start of the program. Unlike other residency by investment programs, the Greek program allows those that have purchased a property with a mortgage loan and are still paying it back to qualify. If you’re still paying back a mortgage on the property, you’ll most likely need an income of €30,000 per year. Through the program, the investor receives a 5-year residence permit that’s indefinitely renewable as long as the investment is maintained.
Some additional advantages of the Golden Visa program are that the investor doesn’t have to reside in the country and, as of 2020, can obtain the visa via a remote application. It’s possible to receive Greek citizenship after 7 years of residency, given that the investor meets the minimum day requirement in the country during that time. It can even cover the applicant’s closest relatives, including spouses, children, and parents.
The positive trend of Greece’s housing market in 2022 is largely due to high foreign investor demand and specialized programs like the Golden Visa. Between 2021 and 2022, net foreign direct investment for property purchases increased by 68%. Overall, the Golden Visa Program can open the door to other investment opportunities, allowing the applicant to travel worldwide and open European bank accounts with ease.
Requirements
In addition to meeting the lending conditions described above, there are other requirements before you can get a mortgage loan: getting an AFM (a tax identification number) and opening a Greek bank account.
After you receive your residence permit (if necessary) you should then get your personal tax identification number which is referred to in Greece as an Arithmo Forologiko Mitro or AFM. You can get an AFM by going to the tax office in Greece, no appointment required. You will definitely need to provide your passport and fill out the form; however, you may also be required to provide your full birth certificate and a marriage certificate (if married). Since you can’t pay taxes without an AFM and you can’t own property without paying taxes, this identification number is essential. This number also allows you to open a bank account and set up utilities for your property and is required when you’re closing on the property transaction.
Once you have an AFM, you can then open a bank account. There are various commercial banks and specialized credit companies in Greece, but as mentioned before, you’ll want to research which ones will lend to foreigners as it’s not very common. The Bank of Greece is the central bank and regulates all others in the country.
Here’s what you’ll likely need to open a bank account (with documents translated into Greek and certified as necessary):
Passport
Additional ID as necessary
An AFM (Greek tax number)
Proof of residency (Greek visa as required)
Proof of address via a recent utility bill or rental contract
Copy of annual tax returns
Proof of a Greek phone number (e.g. recent phone bill)
If employed: employment contract (may also request a recent pay slip)
If self-employed: bank statements from the last year
May need:
Copy of birth certificate
Marriage certificate (if it’s a joint purchase)
Last tax return
Once you’ve opened an account with the bank that’s financing your purchase, you’ll need to transfer sufficient funds for the property transaction, including down payment, deposit, and additional fees/taxes.
If you’re investing in a buy-to-let property, there are other laws you must follow. For example, you must have an Elinko Organismo Tourismo (EOT) license, which comes with its own set of conditions and documentation. It’s best to employ a real estate agent or lawyer that can help you through any additional processes.
Documentation
Other than the mortgage application provided to you by your chosen lender, you’ll also need to provide multiple other documents. A series of general documents and financial documents are required, all of which should be translated into Greek and legally certified as necessary.
General documents:
Copy of your passport
A valid visa (as required)
An AFM (Greek tax number)
Proof of current address (e.g. utility bill or rental agreement)
Proof of registered telephone number
Financial documents:
Proof of income
Tax returns from the last 2-3 years
Bank statements from the last year
Proof of any additional income (e.g. dividends, rental income, inheritance)
If employed: letter of employment
If self-employed: statement of assets and liabilities confirmed by an accountant
List of any existing debts (e.g. loans, mortgages)
Greek bank account details
After you’ve submitted all the required documents along with the mortgage application form, the lender will process your application and, if everything is acceptable, approve your mortgage loan.
To sum up
Applying for a mortgage is a serious task, especially if you’re trying to get one in a foreign country where you might not speak the language. This guide is meant to familiarize you with the process so you know what to expect when it comes to getting a mortgage loan in Greece, including lending conditions, requirements, and documentation. If you haven’t quite decided where you want to invest, you could also learn about the mortgage process in Portugal, Spain, Italy, and France or explore the top international luxury real estate brokers.
Getting a mortgage in Greece can be particularly daunting due to the extra hesitations and conditions of local banks. An international mortgage broker can provide you with more loan options when it comes to financing your dream home or investment property in Greece. Professionals at Kredium can help you get a cross-border mortgage or international mortgage with personalized mortgage loan offers. As an international mortgage broker, we have experience in many different markets and can guide you through the entire process to finalize your purchase more quickly while saving time and money. Kredium can help you get a mortgage in 60 countries worldwide. Get in touch by registering on our website today!
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