Are you planning to buy property or a car in Romania, but you would prefer applying for financing than paying it all upfront? Or you need some money for your business, but have no idea where to start?
Find out more below about one of the most common concerns of our clients – how to get a loan or mortgage in Romania, as an expat or foreigner.
How do I find the best bank deals?
After you find the property you want to buy or you have a plan for your business investment, our advice is that instead of going from bank to bank, looking for financing, to hire a person specialized on such matters.
This can be either a financial consultant or a loan broker, because somebody specialized in loans will have connections to many banks and make sure that your file goes faster in the process. Or that it does not actually get stuck on the way.
The deals they can get you are usually even better than the ones you would get when contacting the bank yourself, without an introduction. So they can save you a lot of money and time. Not to mention that they will already know which banks are more expat-friendly or not, which are more open to business investments or rather safe mortgages, and they will have a general idea of the interest rates that each bank can offer you.
We at R&R Partners are not loan brokers ourselves, we are a law office and can help you on other legal aspects of your acquisition. But we can recommend you some great people in the financial industry to help you on the consulting part!
Can I have income from abroad?
One of the most important things you should know when asking for financing in Romania as a foreigner or expat is that many banks might be reluctant to giving you a loan if you have income from abroad. The problem with such income is that, if anything happens and you default on your loan, it is very hard for the bank to get their money back.
For example, if you apply for a mortgage as a Romanian employee, the bank can easily garnish your accounts if you suddenly decide not to make your monthly payments anymore. But if you receive a salary from a foreign company or dividends from a business abroad, most probably this amount will be received in a foreign account. Or can easily be transferred to such an account, if you want to ‘escape’ the loan payments. And this is a risk most banks would not take.
On the other hand, if you are a foreigner and your spouse is a Romanian receiving income in this country, you might stand a better chance of securing a loan – even if their income is somehow lower than yours. We had many clients in this situation, although not everybody can resort to this solution.
When do I take the next step?
In all cases, when it comes especially to property purchase, our strong advice is to never sign a pre-contract or pay any money upfront before actually securing the loan, if you are heavily depending on it.
Being pre-approved by the bank will pretty much guarantee you the loan, but a general initial assessment will not. So wait for the ‘ok’ of you bank and only later make legal promises to potential sellers.
Should I just apply at my own bank for a loan?
If you are living in Romania at this moment, you might already have a personal or business account opened with a specific bank.
And, sure, going to that bank for a loan might sound like a good idea. You are already familiar with their online banking system, their bank clerks and you know who to talk to.
However, this is a common mistake that both Romanians and foreigners make – settling for the ‘easiest’ alternative, which in many cases is not the best. Even if you imagine that this bank is already familiar with you and your sources of income, they already have your file and things would go smoother there, it is not always the case.
Many banks that are client-friendly when opening standard, personal bank accounts are not as efficient when offering financing, might take a lot of time to process your file or could have higher interest rates than other banks. And, in the end, you want your loan to be obtained for as little interest as possible, not to pay more just for convenience.
So our final advice is to always shop around, get more offers and only later decide who you do your banking with.
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