Hi Stefan,

What is the position with regard to equity release? I will have paid cash for my investment in Cluj-Napoca when it competes (hopefully) August/September. My initial intention was to sell shortly after completion, however it may make more economic sense taking into account the existing capital appreciation, to retain the property, release equity and rent it out.

Are there any mortgage products in place to accommodate this intention and, if so, what sort of interest rates would I be looking at in repayment terms.

A standard mortgage is subject to the mortgage law and such a mortgage can only be used to acquire a property to become the owner.

Once you are the owner, you can take out a "home equity loan" up to 80% of the value of the property for a tenor of 25 years (if you go over 25 years life insurance is mandatory). It is therefore in principle a "personal loan with mortgage collatoral" and is subject to the Romanian civil code legislation.

What you effectively do with this money from a home equity loan is the client's choice (whereas with a mortgage the destination of the funds is always the seller of the property)

Another option is that you can secure your current property with a mortgage credit called "credit imobiliar" (subject to the civil code legislation) whereas you guarantee with your excisting property to buy another property. The funds released also here have to go to the seller of this other property you are buying.

This "credit imobiliar" option has an interest benefit of 1% per year compared to the home equity loan.

Mortgage loan "Credit Ipotecar" (subject to the mortgage law)

CHF
interest first 6 months: 3,9% then variable rate LIBOR 6M CHF + 3,9% = 6,8%
EURO
interest first 6 months: 4,9% then variable rate EURIBOR 6M + 3,9% = 8,65%

Mortgage loan "Credit Imobiliar" (subject to the civil code legislation)

CHF
interest first 6 months: 3,9% then variable rate LIBOR 6M CHF + 3,9% = 6,8%
EURO
interest first 6 months: 4,9% then variable rate EURIBOR 6M + 3,9% = 8,65%

Home equity loan (subject to the civil code legislation)

CHF
interest first 6 months: 4,9% then variable rate LIBOR 6M CHF + 4,9% = 7,8%
EURO
interest first 6 months: 5,9% then variable rate EURIBOR 6M + 4,9% = 9,65%


As you can see releasing equity to buy another property within Romania is cheaper with the "credit imobilar" option (as you are mortgaging your property to buy another property). But then again, your newly acquired property is mortgage free (as you secured it with you excisting property).

If you want to release cash equity to invest outside Romania then the "Home equity Loan" is the only option available.

These rates are pretty horrendous, can you give me datails of any early repayment charges that are attached to the mortgage.

Regards

Alan

Has anyone actually been through the process of getting a Romanian mortgage approved yet?

If so, what information do the banks generally require from someone in full time employment i.e. how many months payslips, bank statements, bank reference etc....

Dave.

Hi Dave,

I have just completed my mortgage application. The specific bank asked for:

- 3 months bank statements
- 3 months salary slips
- The employment contract


Regards

Erik

Hi Erik

How long did the complete process take?

Did you go direct to the bank (any trips over there?) or via a broker?

Regards

Sanj

Thanks Eric,

Do you know was your mortgage approval subject to a UK credit search? I know Romanian banks don't have direct acces to UK credit ratings but they can do it through third party partners.

I had read before that a search was not necessary but a broker for Romanian mortgages recently mentioned that it was a requirement for what they were offering. Was just wondering is it a one off with that particular bank or is it now standard practise?

Regards,
Dave.

Hello there,

Just to add to the thread, i have spoken with one of my contacts at Easy Credit, Romania.

He has informed me of the following...

A credit report for UK applicants is mandatory and is being requested by banks in Romania as a matter of good practice and is understandibly so. This report has so far been requested by the broker to be attained by the client from agencies such as Equifax and Experian and then supplied to the broker in a PDF format. The broker can then send this to the bank for inspection.

He has also informed me several interesting points. Banks in Romania do not use the overall 'credit score' on the report and clients with a less than average credit score can still attain finance with no problems. The report is used more to understand a clients out goings, credit limits and account management. Therefore issues such as lower credit score due to short time at address etc are not an issue.

The availability of a UK credit report will not make any difference to the type of deal or rate available to you etc, it is simply now a mandatory part of the application.

For further details, please see...

http: / /www .equifax .co .uk/

or

http: / /www .experian .co .uk /creditreport/


Regards,

Lee O'Connell

Hello all,

Will be applying soon for mortgages in Romania and would like to ask if other people have seen rates lower than the ones quoted here by Easy Credit. They are indeed higher than I am used to in other EE countries.

Cheers,

Richard