A friend of mine is getting married soon, and she asked me what the possibilities were for a young couple to buy their first home. My answer was that it depends first of all on money. Finding a way of financing real estate is surely a bigger problem than choosing the type of property you want. Buying a family house generally requires much more money than buying a flat. A difference also exists between old and new property.
Furthermore, you have to consider how much it will cost you to maintain the property. If you have a choice between buying an old apartment or a new one, the answer is clear: there is not a big difference in price between older and new flats, but there is a great difference in the quality you get. The materials and building technologies which are used today are rapidly developing and improving, so maintaining a new apartment would cost you almost nothing in the first 20 years. And after those 20 years, you will still be paying less than you would if you had bought an old apartment.
Concerning access to financial resources, one of the three options you have is a building society. This option could work only if you have been saving money for a certain and can use what capital you have to take out a loan. The percentage of the sale price which could be typically financed this way is somewhere in the region of 50%.
Another option you can use is a mortgage. Of the five banks in Slovakia which now have a license to issue mortgages, only two banks are actively involved in mortgage financing. The reason is simple: the legal environment for this type of banking activity is immature, and collecting a lien can be very complicated. Mortgages are again a way of financing which can be used only if you have already some amount of money. The percentage of the sale price that can be covered by mortgage is up to 60% of the value of the property you use as collateral.
Finally you can use a combination of both options. If the loan offered by a building society requires only the signature of a guarantor, rather than a piece of property as collateral, you may be in luck. Under mortgage law, you have to give a property in collateral to get a mortgage (this can be the property you intend to buy or a property oened by a third party).
If you have read these lines carefully, you may have noticed that I haven't mentioned the third situation, which is if you wish to buy a property but you don't have any money.This is the most common situation, and the majority of Slovak citizens belong to this group. Slovakia has yet to establish appropriate legal and economic measures to help these people.
Andrea Tašárová is the Secretary General of NARKS (the National Association of Real Estate Agencies). She can be reached with questions or comments at email@example.com