The conditions of granting housing loans to tighten since October
New, tighter conditions for housing and consumer loan disbursement took effect in July. Another tightening wave is expected in a week. Clients wanting to make use of exceptions should hurry up as their chances are diminishing with every quarter.
The new legislation has canceled the disbursement of housing loans for over 90 % of the collateral value and lowering of the limit for the disbursement of loans for over 80 % of the collateral value. Moreover, a limit of the share of a customer’s total indebtedness has been set at 8 times the customer’s net annual income
Although the tightening of conditions was not sudden, the number of exceptions has been decreasing by 5 % every quarter. The next tightening applies since the beginning of October.
Exceptions to financing of 80 – 90 % of collateral value
- since July 1, 2018 up to 35 % of new loans
- since October 1, 2018 up to 30 % of new loans
- since January 1, 2019 up to 25 % of new loans
- since July 1, 2019 up to 20 % of new loans
Exceptions to financing exceeding 8 times the net annual income
- since July 1, 2018 up to 20 % of new loans
- since October 1, 2018 up to 15 % of new loans
- since January 1, 2019 up to 10 % of new loans
- since July 1, 2019 up to 10 % of new loans = 5 % + 5 % for the young (up to 35 years old, annual income up to 1.3 times the average salary, DTI max. 9)
If we look at average real estate prices (source: Nehnuteľnosti.sk), even now, when buying a 2-room flat in Petržalka, you need about €13,000, in Nitra €8,800 € and in Žilina €8,500. This, however, only applies if a client qualifies for a financing exception for 80 – 90 % of the collateral value. Otherwise, it is necessary to save double the amount.
If a client is interested in drawing a consumer loan for the remaining amount, it is currently twice more likely to get an exception compared to the beginning of the next year.
If clients do not qualify for an exception to financing exceeding 8 times the net annual income, they will have to pay the total difference between the purchase price and the maximum mortgage amount from their own savings. If a resident of the Bratislava Region with an average salary is interested in a 2-room flat in Petržalka, they should have at least €40,000 in their saving account. If a resident in Žilina wants to buy a flat of the same size, they should have savings of at least €20,000.
Advantages of a mortgage loan from Tatra banka:
- interest rate from 1.25 % p.a. with a 3-year fixed-rate period
- no origination fee
- no land register fee (we will reimburse clients €66, not applicable to an accelerated land register procedure)
- reimbursement of early loan repayment charge (not applicable to Tatra banka loans and the disbursed credit must be secured by a property)
Average price of a 2-room flat Q2 2018:
Bratislava I: €170,000
Bratislava II: €126,000
Bratislava III: €141,000
Bratislava IV: €120,000
Bratislava V: €130,000
Banská Bystrica: €82,000
Košice I: €89,000
Košice II: €80,000
Košice III: €82,000
Košice IV: €76,000
Average net monthly salary
(1st half of 2018):
Bratislava Region: €938.18
Trnava Region: €704.59
Trenčín Region €697.57 €
Nitra Region €618.31
Žilina Region €669.52
Banská Bystrica Region €637.25
Prešov Region: €576.22
Košice Region €689.16
Maximum mortgage loan:
Bratislava Region: €90,065.28
Trnava Region: €67,640.64
Trenčín Region: €66,966.72
Nitra Region: €59,357.76
Žilina Region: €64,273.92
Banská Bystrica Region: €61,176
Prešov Region: €55,317.12
Košice Region: €66,159.36
Source: Statistical Office of the SR
Note: The maximum amount of a mortgage loan is calculated as 8 times the average net annual salary. It is a simplified calculation based on an assumption that a client repays no other loan, has no credit card or authorized overdraft, or other obligations.
Please also note that the measure of the National Bank of Slovakia stipulates that after deducting loan repayments and other financial obligations from clients’ net monthly income, they must be left with a living wage and a 20 % difference between their monthly income and living wage.
With a loan of €50,000, an interest rate of 1.25 % p.a., the term in months/number of installments of 360, a one-time origination fee of €0, a one-time property appraisal fee of €150, a one-time land register fee of €66 and a monthly property insurance premium of €3.33, the annual percentage rate is 1.43 % and the monthly loan installment is €166.63. The total amount paid by the client is €61,401.60 and the interest is calculated based on all months in the year having 30 days and a calendar year having 360 days.