Financing Your Property in Hungary

How can you find the right solution to finance your dream home in Hungary?

A holiday home — or even an entirely new home — in another European country does not necessarily have to remain the privilege of those who have saved several hundred thousand euros over many decades. In principle, you can also finance your new property. Especially considering that property prices in Hungary — particularly outside Budapest — are still significantly lower, financing may be easier than you think.

1. German Mortgage to Purchase Hungarian Property? In Principle, Yes.

The simplest option is usually to take out a German mortgage on the familiar terms offered by your own bank. You benefit from historically low euro interest rates, and neither you nor your bank need to deal with formalities abroad. In addition, there is no exchange-rate risk. However, most banks in Germany require a land charge over a property located in Germany as security. If you do not own an unencumbered property in Germany, or do not wish to encumber one, this alternative may be less attractive for you. But there are always exceptions. Simply ask your bank — or ask us!

2. A Mortgage in Hungary? How Does That Work? Easier Than You Think.

In principle, Hungarian banks should not put you at a disadvantage because of your “foreign” income. As a rule, such income is also significantly higher than the Hungarian average, so a Hungarian bank may generally classify you automatically as a “better debtor”. Anyone who can prove a net income of more than approximately EUR 800 per month — which should hardly be difficult in German-speaking countries — will usually be eligible for special terms.

Of course, it may happen that the bank asks for translations or certified copies from the tax authority. However, the additional costs incurred as a result are marginal. Most banks in Hungary then require that at least approximately 30% of the purchase price be covered from your own funds, meaning that the loan will amount to 70% of the purchase price.
Even if you cannot provide 30% of the purchase price in cash, it is generally not a problem to have this portion financed by your German bank, without the need for additional security.

In this scenario, however, the exchange-rate risk and the fact that the loan would have to be repaid in Hungarian forints must also be taken into account. The trend of recent decades indicates that a gradual depreciation of the Hungarian currency is more likely. Nevertheless, you should keep this risk in mind before taking out a forint-denominated loan.
Do you have any further questions? We would be pleased to advise you.