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Buying property in Montenegro – Mortgage options

11th May 2019

If you are interested in buying property in Montenegro but do not quite have the sufficient funds, getting a mortgage in Montenegro is definitely an option. In early days of Montenegro Property expansion, it was quite difficult sourcing the finance for buying a property. Those days are now long gone and all the major banks in Montenegro offer mortgage solutions to international property buyers.

There are conditions that have to be met though.

Firstly, Montenegro banks do not lend over 50% of the property value to international property buyers. Secondly each applicant has to go through a credit check procedure, pretty much same as in any other country. Although that different banks have different procedures and plicies in place, these two conditions are present in most of the banks in Montenegro

Buying property in Construction – can I use bank finance then?

Certainly, the only difference is that the bank will not release the funds until building is completed while the procedure is finalised at the time of the buyer signing the sales agreement with the seller.

What are the interest rates – they vary depending on the credit worthines of the client and the credit risk but do fall between 4-6% in most cases.

How does this work in practise and are there any benefits?

We will take Lovcen Bank foreign client mortgage example.

You have found a property to buy for €100,000, one bedroom apartment. A deposit is placed at the bank amounting to 50% of the property value, which is €50,000. The bank loans you €100,000 at 3.5% per annum. on 20 years this is €6,948 per year or €579 per moonth.

And what about the rental income you can achieve from this property?

Generally, this type of  propery can achieve net yields of  somewhere between 5-7% per anum which means that rental would pretty much cover your bank repayments.

What if you do not want to wait that long?

Properties in Montenegro are generally expecting to achieve around 20% capital appreciation in the next few years, bearing in mind that you would finance only 50% of the value, the return on cash invested is expected to be around 40%. Not bad for a few years!

For details on mortgage options and other property investment enquires, please contact our team at [email protected]

About IM Property Group

IM Property Group is  Property Adviser and an Investment Specialist operating in Montenegro.

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IM Group Limited

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85310 Budva
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