Financing your property in Hungary
How do you get the appropriate solution to finance your dream home in Hungary?
A holiday home or even a completely new home in other European countries doesn’t necessarily have to remain the privilege of those who have collected several hundreds of thousands on their savings account for decades. In general, you can also finance your new property. Especially with regard to the much lower land prices in Hungary (particularly outside Budapest), financing may be easier than you think.
1. German mortgage for the purchase of a Hungarian property? Fundamentally yes.
The easiest way is usually the use of a German mortgage on the known conditions at your house bank. You benefit from the historically low interest rates and neither you or your bank have to worry about formalities abroad. In addition, there is no fluctuation risk. However, most German banks require a mortgage on a German property as a security. So, if you don’t have or don’t want to burden an unencumbered property, this alternative might be less attractive to you. But there are always exceptions. Just ask your house bank or us!
2. A mortgage in Hungary? How does that work? Easier than you think.
In principle, Hungarian banks shouldn’t see your foreign income as a disadvantage. Usually those incomes are significantly higher than the Hungarian average, which means that the Hungarian bank can automatically classify you as a “better debtor”. If you can prove more than about 800,- € net income per month (which in the German-speaking area isn’t as difficult), you will usually get special conditions.
Of course, the bank may require translations or certified copies from the tax office. However, the resulting additional costs are marginal. Most banks in Hungary then require that at least about 30% of the purchase price has to come from your own resources, so that the loan will be 70% of the purchase price.
Even if you can’t provide the 30% of the purchase price in cash, it is normally not a problem to have this part financed by a German bank, without the need for additional security. However, the risk of price fluctuation and the fact that the loan would be repaid in Hungarian forints should be taken into account. However, the trend of recent decades shows that the gradual worsening of the Hungarian currency’s price is more likely. Nonetheless, you need to keep this risk in mind before you take out a forint loan.
Do you have any questions? We are happy to help.