Buying property in Slovenia

A_wolly

Hi,

My wife and I are looking to buy a holiday home in Slovenia for €180000. We have a deposit of €80000 and have a residential mortgage in the UK of £250000 on a property worth an estimated £380000.

I've contacted many Slovenian banks to obtain a mortgage there but due to fairly recent Slovenian legislation, they won't lend unless I'm already resident in the country or earn my income in EUR. I spoke to our current lender, the Bank Of Ireland, to borrow more on top of our exiting mortgage but they won't lend if the money is to used for a foreign investment/property. I find this strange, since the money lent will be secured against our UK property, so what would it matter what we spend it on.

Anyway, other options I've tried are international mortgage brokers (who deal with private banks) and other UK retail banks. However, none will lend for a purchase in Slovenia unless the loan is over £500000.

As far as I see it, we have the following options remaining:

1) Take out a secured loan.
2) Wait until our fixed rate ends in Jan 2019 and remortgage (assuming the additional borrowing can be used for foreign investments).
3) Remortgage now and get hit with a £12000 early repayment charge (again on the same assumption as above).
4) Sell our house, get hit by the early repayment charge and move.

Options 2, 3 & 4 won't work for us due to, wanting the finance ASAP for the house we've found abroad, repayment charges and not wanting to move house right now (though we plan to sell in 18-24 months). I think this leave us realistically with just the secured loan, which is not ideal.

So, my questions are:

1) Has any bought a property in Slovenia requiring finance since the new legislation came into place for non-EU income?
2) Can anyone suggest alternative options to the secured loan, to raise the extra €100000 within no lore than a couple of months? (Excluding family loans and fundraising.)

Many thanks!

G_M

I wait with baited breath.......

Smodlet

Slo, innit? I wonder venia'll get an answer.

steampowered

I doubt anyone here has bought property in Slovenia.

You could try the British expats forum? https://britishexpats.com/forum/

Your best option might be to remortgage and take the hit on the early repayment charge.

Even if you do manage to get a mortgage in Slovenia, it is likely to be more expensive than the mortgage you pay on your UK property.

UK mortgage rates are very low right now. It may even be that remortgaging would bring down the rate on your mortgage? In which case you'd at least have some saving to offset against the early repayment charge.

I would also query whether this is really a good idea. It sounds like you need to raise another EUR 100k, which is about £90k. This would take your mortgage to £340k on a £380k property, so you would be at 90% LTV. That's quite high, and is usually what a first time buyer should aim for - not someone buying a holiday home. I'm sure holiday properties in Slovenia will still be available in a few years time.

A_wolly

Steampowered: thanks for your reply and the expat forum you linked to is a good suggestion, I'll try there too.

Regards questioning if we should do this at all, it's a fair comment. Had we been able to obtain a second mortgage for the property I think we'd be a lot happier (- we had a second mortgage on a UK property that we let until recently and that worked well). If the only options are a secure loan or remortgage our existing property then it's much less appealing.

I was hoping someone might have had experience of obtaining a mortgage in such circumstances. One last thing I'll try is to contact Austrian banks because I understand Volksbank used to lend on Slovenian property for EU citizens. Failing that it seems we'll have to park this dream for a few more years.

maninthestreet

Smodlet wrote: »

Slo, innit? I wonder venia'll get an answer.

It means nothing to me.

Thrugelmir

A_wolly wrote: »

I find this strange, since the money lent will be secured against our UK property, so what would it matter what we spend it on.

Days of a property being an ATM are long gone. Mainstream lenders have no appetite for the type of business you are trying to conduct. They would in fact prefer you took the 2nd charge secured loan route as the interest charged would reflect better the risks involved.

jaybeetoo

If you take out a Euro loan you!!!8217;ve also got the currency exchange risk to think about.

A_wolly

Thanks for responses. After some exploration I thought I'd give an update. Indeed, it seems no UK lender will offer us a mortgage for Slovenian property and no Slovenian banks will lend if main income isn't in EUR. That left us with second charge mortgage being the only lending option, which we're not very comfortable with due to higher rates. We're selling our home at the moment and believe we'll release enough equity to buy in Slovenia in cash, so this is our intention now.

somethingcorporate

Thanks for the update. Good luck in your Slovenian adventure.