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Even when it’s possible to buy property in Austria using personal assets, it is worth considering taking out a mortgage. Top Austrian banks are Bank Austria, Erste Group, Immo-Bank, ING-DiBa Direktbank Austria and Raiffeisen Bankengruppe.

Mortgages facilitate foreign purchases

Strict controls on the “origin of funds”: this routine procedure in Austria requires foreign buyers to provide proof of how the funds were acquired to confirm the purchase uses legally obtained assets. Without the correct documentation, banks may freeze the funds even after the sales contract has been signed. Buyers taking out a mortgage are not submitted to this check once their application has been approved and the borrower is considered to have proven the origin of the money.

Permanent residence applications have a better chance of being accepted if there is a good credit history with an Austrian bank.

Tax breaks on rental property: mortgage costs and interest can be deducted from the taxable base, reducing or eliminating income tax.

Lending terms

Requirements vary depending on the bank. There are no unified income requirements but clients more likely to get approval if, after deduction of monthly repayments, there is still at least €2,000 left on the account – more is required for applicants with dependents.

The age of the borrower must not exceed 65 years by the final mortgage payment and a loan can be granted for one to twenty-five years maximum.

Mortgage terms in Austria are beneficial. Interest is not high and equals 2.5–3.5% per annum and even 2.0% for borrowers with high solvency. Foreign citizens must have a good credit history when applying for a loan.

The minimal initial instalment must be at least 50% of property value and in some cases it can reach 70%. If the buyer already owns property in Austria, they can take out a loan against it to buy new property. In this case, there may be no initial instalment at all. Credit is granted for €25,000–180,000 maximum.

Required documents

  • passport;
  • signed property sales agreement;
  • proof of salary for employees or proof of company income for business owners. It is best to provide as much proof of income from Austria and other EU countries over the past 3–5 years as possible;
  • other sources of revenue (e.g., contract for the sale of valuable property or bank statements from savings account).

Documents need to be translated into German by a certified translation bureau. The translations may require notarisation if a large amount of money is applied for.

Real estate bought through a legal entity incorporated in Austria exclusively for the purposes of this purchase may not have extensive funds. In this case, the owner should present proof of other income. Alternatively, the legal entity could apply for a loan for future business project, but this is a very complex process and the bank will require a business plan.

Loan applications take 2–3 weeks for approval.

Additional costs

Banks fees for mortgages are 1–2% of the property value plus another 1% to finalise the mortgage agreement with the bank in the presence of a notary. Independent property valuations range from €200 for an apartment to several thousand for a hotel. The bank may conduct the valuation, in which case it is free of charge.

Local real estate agencies can assist in getting a mortgage. This service costs about 2–5% of the loan value.