INCREASINGLY attractive real estate projects have been popping up on the Slovak market recently and grabbing the attention of foreign investors. However, few banks have learned how to tap the potential of this new customer segment.
The majority of Slovak banks provide loan products only to foreigners who have a permanent residence in Slovakia or some source of local income.
"Foreigners who have permanent residence in Slovakia can obtain any of VÚB's loan products on the same terms as Slovaks," VÚB spokesman Michal Kopecký told The Slovak Spectator.
"However, there are many foreigners who do not have permanent residence but live in Slovakia and are interested in buying property because they plan to stay here for an extended time. They want to have their own place here, or think that buying property [in Slovakia] is a good investment opportunity," Kopecký said.
In February 2005, VÚB launched a product for such clients, approving mortgages in both Slovak crowns and euros to foreigners with only a local income.
"Interest in these types of products among expats has surged. We expect that growth to continue with regard to the construction of new residential projects."
HVB Bank Slovakia is another of the few banks that approves mortgages to foreigners, with the sole requirement that the real estate put up as collateral be located in Slovakia. The bank has provided this type of mortgage since October 2005.
According to HVB Bank Marketing Director Andrea Kollárová, the bank provides all types of mortgages to foreigners, even those not living in Slovakia. "However, the terms of the loans are specific, and differ from those offered to Slovak citizens."
Foreigners who take out a mortgage at HVB Bank must be citizens of the EU or other selected countries, and must demonstrate their ability to pay. As mentioned above, the collateral must be located in Slovakia.
The amount of the mortgage can reach up to 70 percent of the value of the collateral. The obligation of the client to document the purpose of the loan depends on the type of loan.
"We provide mortgages even for the purchase of property that will be rented. In that case, we take into consideration the estimated revenue. At the same time, we provide all foreigners, as well as Slovaks, the option of paying the loan in euros," Kollárová said.
HVB Bank Slovakia reports significant interest in these mortgage products, mainly from the citizens of Great Britain, Ireland and the countries of Scandinavia. "Those countries view Slovak real estate as a desirable investment," Kollárová said.
ČSOB has offered mortgages and consumer loans secured with collateral to foreigners since 2003. However, ČSOB spokeswoman Marta Krajcerová cautioned that the bank approaches the approval of these products individually.