Financing a Property in Corfu as a Foreigner

Purchasing property in Corfu, Greece, is an exciting investment opportunity for foreigners seeking a vacation home, a second residence, or a long-term investment. However, the process of financing a property as a foreign buyer can be a bit more complex than it is for Greek nationals. This guide will provide you with essential information on how to finance your Corfu property purchase as a foreigner, from securing a mortgage to understanding the legal and financial requirements.

1. Understanding Foreign Ownership in Greece

Greece is open to foreign property buyers, but there are specific regulations that govern property purchases by non-EU nationals. If you are a foreigner wishing to buy property in Corfu, it’s essential to understand the local laws surrounding foreign ownership.

• EU Nationals: Citizens from EU countries can purchase property in Corfu without any special restrictions, as they are treated the same as Greek nationals.

• Non-EU Nationals: Foreigners from non-EU countries may face additional restrictions, especially in certain areas (such as border zones or agricultural land). However, foreign buyers can generally purchase property with a few extra steps, often requiring approval from the local authorities or the Ministry of Defence in certain areas.

2. Financing Options for Foreign Property Buyers in Corfu

As a foreigner looking to purchase property in Corfu, several financing options are available to you. Here are the most common methods of financing a property purchase:

1. Mortgage Loans from Greek Banks

Many Greek banks offer mortgage loans to foreign nationals, though the terms may vary depending on your residency status, income, and the property itself.

Eligibility Criteria:

• Residence Status: Non-residents may find it more difficult to secure a loan compared to Greek residents, but it is still possible with the right documentation.

• Down Payment: Greek banks typically require a down payment of around 30-40% of the property’s value. This can be higher for non-residents.

• Loan Duration: Loan terms usually range from 10 to 25 years.

• Interest Rates: Interest rates are competitive, but may be slightly higher for non-residents.

Documents Required:

• Proof of income (such as tax returns, pay slips, or bank statements).

• Passport and proof of identity.

• Evidence of residence in your home country.

• Information about your property purchase.

2. International Mortgage Providers

Some international banks and lenders offer mortgages for non-residents purchasing property abroad. These lenders may have more flexible terms or offer loans in your home country’s currency, reducing currency exchange risk.

• Expat Mortgage Brokers: These brokers specialize in helping foreigners secure mortgages in foreign countries like Greece.

• Loan Terms: Loan terms may be more flexible compared to Greek banks, but they may come with higher interest rates or additional fees.

3. Cash Purchase

For those who prefer not to take out a mortgage, purchasing a property with cash is always an option. In fact, many foreign buyers opt for a cash purchase to avoid interest rates, lengthy approval processes, and the associated paperwork.

• Advantages: Faster transaction times, no need to worry about loan repayments or interest rates, and more negotiating power.

• Disadvantages: Significant upfront capital is required, and there is an opportunity cost to tying up funds in real estate.

3. The Role of a Notary and Legal Advice

Foreign property buyers in Corfu should always work with a qualified notary and real estate lawyer to ensure a smooth transaction. Here’s why:

1. Notary Services

In Greece, a notary plays a central role in property transactions. The notary ensures the transaction is legal, that the seller has clear ownership of the property, and that there are no outstanding debts tied to the property. The notary will also assist in registering the property with the land registry.

2. Legal Assistance

A real estate lawyer is essential when navigating the legalities of property ownership as a foreigner. They will help:

• Draft or review the property sales contract.

• Ensure all tax obligations are met.

• Verify that the property is not part of any restricted zones (particularly important for non-EU buyers).

• Help with Title Deed checks and ensuring that all documentation is in order before the final purchase.

4. Tax Considerations for Foreign Property Buyers in Corfu

When buying property in Corfu, it’s essential to understand the tax implications of the purchase. Here are the key taxes that foreign buyers should be aware of:

1. Property Transfer Tax

• Rate: Typically 3% of the property’s purchase price or assessed value (whichever is higher).

• Who Pays: The buyer is responsible for paying the property transfer tax.

2. Annual Property Taxes

• Property owners in Greece are required to pay an annual property tax (ENFIA), which is calculated based on the size and value of the property.

3. Capital Gains Tax

• If you decide to sell the property in the future, a Capital Gains Tax may apply on any profit made from the sale.

4. Inheritance and Gift Taxes

• If you plan to pass your property down to heirs, be aware of inheritance tax, which can be significant depending on the property’s value.

5. Steps for Purchasing Property in Corfu as a Foreigner

Here is a quick guide to the steps involved in purchasing property in Corfu:

1. Research: Look into different areas of Corfu and identify your budget, preferences, and goals for the property.

2. Hire a Real Estate Agent: A local real estate agent can help you find the best properties and navigate the buying process.

3. Secure Financing: Decide whether you will finance the property through a mortgage or cash. Speak to banks or international lenders for mortgage options.

4. Legal and Notary Assistance: Hire a lawyer and a notary to ensure all legal requirements are met.

5. Sign the Contract: Once you’ve agreed on the terms, sign the sales contract, and pay the required taxes and fees.

6. Registration: The notary will register the property in the land registry, officially transferring ownership to you.

Conclusion: Financing Your Dream Property in Corfu

Purchasing property in Corfu as a foreigner is an exciting venture with various financing options available, including Greek bank mortgages, international lenders, or even a cash purchase. However, it’s essential to ensure that you work with qualified professionals, such as a lawyer, notary, and real estate agent, to navigate the process. By understanding the financing options, tax considerations, and legal requirements, you can make a well-informed decision and secure your dream property in Corfu.