The first thing you need do is to understand the UK system of applying for a mortgage is different here. In Crete - a whole different criteria applies. In the UK administrative systems are set in tablets of stone, you will find in Greece methodology is always changing - often depending upon who you speak with on a particular day. However, as accurate as it is possible to be, here are the whys and wherefores of applying for a Greek mortgage.
You need to fill in a Bank Mortgage Application Form - which will ask for your Greek tax number, the type of loan required and the duration of the loan. This is normally 30 years, or up until aged 70. A Personal Data Form needs to be completed, which allows the bank to apply for references in the UK. You will also need to provide a current P60, a Credit Report from the likes of Experian, a recent pay slip and a UK utility bill.
Armed with all this information the branch will translate all the documents and process all the material, before forwarding the file to Athens. This takes more than a little time! Having gained approval, references are then taken up via a UK branch of the bank in London. Allowing for all the bureaucracy, and information becoming mislaid, or copies asked for, an approval, in principle will be made, that you qualify for a mortgage. Please bear in mind no confirmation letter is issued. You will probably receive an e-mail from your lawyer informing you of the news.
Several weeks prior to completion of your house a surveyor from the bank will visit the property for valuation. At this stage the bank will also ask for copies of planning, build license and sales contract and the whole bureaucratic machine creeks into motion - until maybe a document is lost in the system and replacements have to be provided! At this stage you will undoubtedly be asked to again provide recent pay slips and another P60.
Unlike the UK, where a Building Society will keep the deeds, in Crete a bank has to go into court to register their lien on the property - because you keep the deeds. To allow this, you have to do a special Power of Attorney - either in Crete or at the Greek Embassy in London.
Finally, as part of the mortgage arrangements the bank will ask you to take out a structural insurance and a mortgage protection policy. The latter will require filling out yet another form.
At long last the bank goes into court and several days later funds are advanced to your account. Phew!
THINGS TO CONSIDER
The bank will charge for legal, survey and court costs, which, together with insurance cover totals around 2,500Ä, which is taken off the advanced funds, so you need to budget for this.
There are several bank mortgage options currently available - fixed rate and variable - thereís even an eighteen month holiday option before you need pay a single euro. However, whichever package you opt for, bear in mind there are no horrendous early redemption penalties.
You could even consider a Greek mortgage as a cheap Ďbridgingí loan while you wait for your house in the UK to sell.
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But what with banks in chaos and lending down to a mere trickle - housing market in the doldrums - and the sterling exchange rate on its knees Ė is that dream of buying a home in Crete slipping away?
It neednít be, because there is a cunning plan afoot.
Anyone serious on buying a property abroad will normally have sufficient cash for a deposit. The real problem arises on being able to find the balance - which can be more of a problem if the builder is seeking stage payments to finance the build.
When the pound was strong you were probably working on a budget of around £100,000 or so and for that, in Crete, you would expect to buy a reasonable two bedroom detached house. However that same property today would now equate to something like £130,000 PLUS purchase costs.
YOUR PROBLEM IN A NUTSHELL
You need to get round the poor exchange rate and buy more time to allow the UK market to recover.
A CUNNING PLAN
Firstly letís consider the exchange rate. Take a look at Snobby Homes. As the builder they sell direct and therefore you save the high commission built in for an agent. While the Snobby build specification is extremely high, through strict cost control, two bedroom detached Snobbys are being developed in western Crete for around £100,000 - and thatís an all-inclusive price of furniture, furnishings, fittings AND all legal fees, taxes and purchase costs. In effect youíre paying the same amount of money as you originally budgeted way back in 2007!
On any house purchase you need to put down a deposit. Snobby Homes are the only builder in Crete to legally secure purchasersí deposits. This means the money you put down is never at risk. The balance only falls due on completion of contract.
Now solving the big problem. Where do you find the balance? OK, you have the money but itís all tied up in your house, and in the current UK climate itís bound to be a couple of years before matters begin to move again.
In Crete, Snobby Homes can help you arrange a 75% mortgage on their properties with an eighteen month holiday before you have to pay a single penny. What does this mean? You go to Crete this year and decide to buy a Snobby and put down a deposit. That house will be completed by the end of 2010. The mortgage pays the builder on completion, but you wonít have to pay anything on the loan until mid 2012. Thatís nearly three years from now! In effect you have the benefit of an amazingly cheap bridging loan, and whatís more, there is no punitive fee to pay either, when your house in the UK sells and you redeem the Greek mortgage.
So there you have it, a win win scenario allowing you to realise your dream of owning a house in Crete - now - with a bonus of buying it at the equivalent of 2007 prices!
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A tin of HP Baked Beans might cost 2Ä. Convert that into sterling and it virtually costs a whacking great £2. Back home Tesco charge a fraction of that price! If you intend to buy the same food brands as in the UK, and shop only in the tourist areas, then youíll find no real difference in the cost of living between Crete and the UK. This isnít due to extortionate prices in Crete, theyíve remained more or less the same. Itís the poor pound that makes everything appear more expensive.
Bearing in mind a typical office worker only takes home around 900Ä a month, then you see it should be possible to live on around that figure. Back to the beans again. Culturally, Greeks donít eat canned baked beans, they cook their own. Importing goods just for tourists is an expensive business you have to pay for. It makes better sense to follow how the locals shop.
Youíll find buying seasonal fresh fruit and vegetables from the greengrocer works out very cheap. In the last few years three Lidl Supermarkets have opened up in the Chania area where a monthly shop of groceries, cleaning supplies and beers or wine will typically cost around 150Ä for a couple. Supermarkets such as Champion, Maxi Dia and large IN.KAís also keep prices low and invariably have a frozen and fresh meat counter.
There is no council tax in Crete, apart from several euros added to each utility bill. Typically, living permanently in Crete in a two bedroom Snobby the annual water bill should be less than 100Ä but if you have a pool, itís more likely to be in the region of 250Ä. Typically electric should cost an average of 80Ä per month. Bear in mind that includes air conditioning, but hot water is FREE for several months of the year.
New cars are around the same price as the UK, but because of a buyerís and sellerís tax, the price of vehicles 2-4 years old are still relatively high. Car insurance is more expensive than in the UK and most people opt for third party as repairs are relatively cheap. If you want to do the British thing and go fully comp., then this bumps the price up even more. Road tax is based upon engine size and is comparable to what you pay in the UK.
Eating out is still relatively cheap - providing you steer clear of tavernas catering more for tourists. Far better to go to places frequented by locals. Here, dinner with local wine will cost around 12Ä per head - unless you opt for fresh fish and then it will more than likely be around 20Ä.
If you have an income of £12,000 per year, then for this Crete offers a comfortable lifestyle, covering all the bills, running a small car and dining out regularly.
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There are four main stumbling blocks preventing people from buying a property in Crete. Snobby Homes set out to find workable solutions to help find a solution to these problems.
WHICH ONE ARE YOU?
Weíre trying to sell our house, down-size and use the balance to buy a house in Crete.
PROBLEM While current indications appear to show a tentative increase in UK house sales, until first-time buyers can be attracted back into the market it would seem there will probably be no significant improvement in the time it takes to sell a house until the end of next year. SOLUTION If you have the deposit, Snobby Homes will give you the time to sell.
Even with the fall in UK property prices there is still collateral in our home, but no bank will grant us a loan.
PROBLEM Despite all the saber rattling, banks are just not lending. SOLUTION If you have the deposit, Snobby Homes can help you arrange finance for the balance with a Greek mortgage.
We have the money but what with the exchange rate we canít afford anything.
PROBLEM Eighteen months ago a two bedroom detached home in Crete would have cost the equivalent £115,000 and up to 15% on top of that to cover all purchase costs. Today, with a drop in sterling of some 30%, that same house would be costing around a total of £155,000. SOLUTION Snobby two bedroom detached homes are all around your original £115,000 budget - and that figure includes all purchase costs too!
We have enough for a deposit, but canít find the balance.
PROBLEM Unlike property in the UK, in Crete, prices have not really been effected. The longer you leave it, chances are you could end up chasing a rainbow. SOLUTION Snobby can help you arrange finance for the balance, with a Greek mortgage.
What with everything else we just cannot afford to buy anything at all.
PROBLEM No matter what, you just cannot beg, borrow or steal enough money to buy a home in Crete. SOLUTION Fancy a two bedroom detached Snobby for peanuts? Much is being talked about fractional ownership, but invariably this is quite complex and you end up buying a property with complete strangers. Not so in Crete. Under Greek property law, several buyers can become the legal owners of a single property. That means if you club together with friends, or family members, to buy a Snobby, each individual can legally own a direct percentage of the freehold. Whatís more, all the owners can take out a joint Greek mortgage and raise a loan up to 75% of the purchase price. Just think. If there were six owners, you could afford a Snobby for less than £20,000!
Have we helped solve a problem? If you have a question or wish to know more details about the above, just e-mail us at email@example.com
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Never let your heart rule your head. Looking at property is a serious business. Before you even step on a plane you need to have drawn up a list of tick boxes and only waiver from one or two of these unless there is a real hard nosed reason to do so. Here are a few common banana skins to factor into your list.
MUST HAVE A BIG PLOT OF LAND
Unless you intend to move to Crete permanently a large plot will be difficult to maintain. Without regular attention and watering youíll end up with a forest of dead vegetation. Did you know, with all the sunshine in Crete, you only need to water about 15 sq. m. of planted ground to cultivate more vegetables that two people are able to eat!
A large plot, by its very nature will be outside of a village boundary. That means there could be potential problems or delays in gaining access to utilities. You also need to consider the possibility of not being near any amenities. Perhaps its OK now, but what happens in years to come if you are unable to get to the shops? And if the plot is outside of a tourist resort then in the winter everything is going to be shut down. Even worse, chances are there will not be any medical facilities within easy reach.
MUST HAVE A SEA VIEW
Who wouldnít? Land with a sea view is expensive, but hereís a top tip. Go for a plot where the land in front of yours drops down. In that way your view will never be spoilt. Too often we come across perfect land with a great view, but chances are someone, some day will build in front of you. You can never say never. Invariably a sea view means you are high up. In the future, as you get older, will a steep drive, or steps, be too much to walk up?
MUST HAVE A DINING ROOM
Itís all very well having pre-conceived ideas as if this was the UK, but youíre in Crete. Living here is different. The sun shines 320 days a year, so mostly you eat and live outside. If you are
determined to have a dining room, chances are it will never be used!
WE WANT SOMEWHERE OLD
If youíre thinking of building or renovating a property yourself, then be aware this is fraught with bureaucratic involvement. The law requires that you use an egineer so as to conform to strict building standards, including earthquake regulations. You must first obtain a building licence and pay taxes and IKA Insurance for the build Ė even if you do it yourself.
Official tax invoices must be obtained for all supplies and labour. Only a Greek registered plumber and electrician can provide you with the proper certification for electricity and water connections. And if that old stone derelict is your idea of heaven, be afraid - very afraid. Nothing short of an open cheque is the difference between dreams and reality. Old buildings invariably have no foundations and are unsafe as they do not conform to the new build safety specifications.
Found an idyllic resale? You need to carefully check two main points. If it is seven years old or more, chances are it will not be built to the same structural strength as a modern house and you ought to have a survey done to highlight any potential faults.
Culturally in Crete locals buy a house for ever, unlike the UK where most people end up moving every eight years or so. Consequently extensions could have been added without a building license which is illegal and could cause a problem. Many builders gambled on thinking once bought, their houses would never be sold on, and cut corners to save costs. There have been many instances, when a Brit wants to sell,and itís discovered the swimming pool never had planning, or more metres were built on the plot than was legally allowed. As you would in Britain, be careful and check everything out.
I DONíT CARE - I MUST HAVE THIS ONE
So youíve found the perfect place - be it off-plan, on a development, or a piece of land to build a new house on. When you are nearly 2,000 miles away - and in the current economic
environment, you do really need to consider protecting your money.
Most builders in Crete prefer stage payments to fund their costs. All require a deposit. That means you are paying in advance and until you receive the key to your house on completion, that money will always be at risk throughout the whole build process. Snobby Homes is the only builder in Crete with a scheme that legally
secures your deposit against loss, and the balance is only ever paid on completion - never in stage payments.
So, if you fall in love with a place, never let your heart rule your head. Be strict with yourself. If not you may well rue the day.
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