How to get a mortgage in Romania when self-employed and living abroad
There are no banks in Romania that offer mortgages to Romanians living abroad that are self-employed (PFA in Romania). Luckily, developers usually offer credit to self-employed home buyers.
We met with Tania Bota, a real estate expert in Constructii Bihor that explained how developer credits can help self-employed Romanians living abroad buy property in Romania.
“Many people prefer a developer credit because they don’t need more than a seven year term anyway”, Tania explains. “And it doesn’t have any interest.”
Learn about the benefits and drawbacks of developer credits in Romania.
Developer credit is available to the self-employed
The application for a developer credit is simpler compared to mortgages because the developer will own the property until most of the loan has been paid off. As a result, they don’t need to do any eligibility checks.
As long as you keep up your monthly payments, the property will eventually be yours. In the meantime, you get to enjoy the property as if it was your own.
Depending on the agreement signed by parts, the deed is signed either after a certain number of paid rates or at the moment of the last paid installment.
No interest payments
Developers typically don’t charge any interest. In exchange, they often charge a higher price for the property. That means you might pay more or less compared to a mortgage. If you like the simplicity of not having to pay interest, a developer credit might be a good choice.
Developers mortgages are also popular amongst people that are happy with a higher monthly rate in exchange for a shorter loan term, up to seven years.
Buying new-builds is easy from abroad
While most banks only offer mortgages on completed constructions, developer credits enable you to buy a property that is being planned. Properties under development are also easy to buy from abroad, since there is little to inspect on site, saving you a trip. If you want to have your say on interior design, you might still want to visit on-site.
Simple application process
The process is simplified as there is no threshold for monthly income, no request for permanent employment contract, tax documents and the existence of other existent bank loans on the clients part does not represent a liability.
How much deposit will you need?
With a developer credit, you will need to provide at least 20%, and sometimes 30%.
If you qualify for a Noua Casa mortgage, you can provide as little as 5% deposit. Get in touch with us to find out if you would be eligible.
For most non-residents, banks will ask for at least 20% deposit, and some might ask for 40%, when getting a mortgage. That means developer credits are comparable to traditional mortgages when it comes to deposit requirements.
What are the risks?
The main risks with new built properties are local government authorization, late material supplies, and financial problems of the developer.
It is also important to review the agreement to make sure that all terms are stated clearly to avoid misunderstandings down the line.
If the developer goes bankrupt before you have become the property owner, you could lose your deposit and any additional payments.
There is also the risk that you become unable to keep up your monthly payments. While developers are often willing to renegotiate payment terms, they have the right to terminate the contract and keep your deposit and payments.
Find out if developer credits are right for you
Get in touch with our team to understand if developer credits are right for you.
If you want to get a mortgage, and not a developer credit, you could consider buying a property in Spain for instance. Our team can help you understand where in Europe you can get a mortgage while self employed.