Real estate loans in Montenegro: hurdles, opportunities and realities
In Germany and other European countries, it is often a matter of course for private individuals to take out a loan when buying a property. Banks offer a wide range of financing models that are specifically tailored to the purchase of houses or apartments. However, the situation is very different in Montenegro. Real estate loans, as we know them from Germany, are by no means so common here, and both locals and foreigners face particular challenges if they want to take out such a loan in Montenegro.
Real estate loan in Montenegro – A rarity for locals
While a real estate loan is the norm in Germany, real estate loans are the exception in Montenegro. Locals often build their houses in stages. As soon as they have saved up some money, they continue building – without taking out a loan. This “piecemeal” construction method is deeply rooted in Montenegrin culture and often takes many years to complete. Plots of land are usually passed down through the family and construction takes place when sufficient funds are available.
A real estate loan in Montenegro is therefore rarely taken out by locals. One of the reasons for this is that the cost of living and wages in Montenegro are often not sufficient to service the loan installments in the long term. For many Montenegrins, it makes more financial sense to build their homes in stages than to take out a long-term loan and bear the burden of the monthly installments.
Foreigners and real estate loans in Montenegro – A challenge
It is often even more difficult for foreigners to obtain a real estate loan in Montenegro. While real estate loans to foreign buyers are quite common in other countries, Montenegrin banks are often reluctant to do so. One of the main reasons for this is the lack of security from the banks’ point of view. A real estate loan in Montenegro that is granted to a private individual from abroad involves higher risks for the bank. If payment defaults occur, it is generally more difficult to enforce the debt with foreigners.
It is therefore rare for private individuals in Montenegro to obtain a real estate loan from abroad. If you still want to make the attempt, you should be prepared for intensive negotiations and possibly also be able to provide evidence of collateral in other countries in order to increase your chances of obtaining a loan. A real estate loan in Montenegro is more frequently granted to companies, which in turn must meet strict requirements.
Real estate loans for companies – Strict requirements
When real estate loans are granted in Montenegro, it is often to companies. However, the banks also set high hurdles here. As a rule, a real estate loan is only approved if the company has been in the black for at least five years in a row and has a stable turnover. In this way, the banks want to ensure that the company is solid enough to service the loan in the long term.
These strict requirements make it particularly difficult for newly established companies to obtain a real estate loan in Montenegro. Nevertheless, there are companies that can successfully obtain financing – provided they meet the relevant criteria.
High interest rates – another stumbling block
Another obstacle to real estate loans in Montenegro is the high interest rates. While interest rates have been relatively low in many European countries in recent years, interest rates in Montenegro are significantly higher. This represents an additional burden for borrowers, as the monthly installments increase considerably as a result.
The interest rates for a property loan in Montenegro vary depending on the bank and the borrower’s credit rating, but are generally between 6% and 8% per year. These are interest rates that act as a deterrent for many potential buyers, especially if they come from countries where lending rates are significantly lower. Anyone considering a property loan in Montenegro should be aware that they will have to reckon with these high interest rates.
You can still try – banks in Montenegro
Despite all these hurdles, it is of course not impossible to obtain a real estate loan in Montenegro. If you are seriously interested in buying a property, you should not hesitate to apply to various banks and try your luck. Some banks that are potentially willing to grant real estate loans in Montenegro are:
- Crnogorska Komercijalna Banka (CKB): One of the largest banks in Montenegro, which also offers loans for real estate. The chances are better if you are a company and can demonstrate a solid credit rating.
- NLB Banka: Part of the Slovenian NLB Group, NLB Banka in Montenegro offers a wide range of financing products, including real estate loans.
- Erste Bank: The Austrian Erste Bank is active in Montenegro and also offers real estate loans. However, strict creditworthiness criteria are also applied here.
- Hipotekarna Banka: Another large bank in Montenegro that also offers real estate loans. However, loans are generally granted preferentially to established companies.
- Addiko Bank: This bank has a clear focus on private customers and could be an option for foreigners looking for a real estate loan in Montenegro.
Conclusion
In summary, it can be said that getting a real estate loan in Montenegro is not as easy as in other countries. The process is particularly difficult for foreigners due to the high requirements of the banks. Locals rarely resort to real estate loans and instead build their houses piece by piece as soon as they have the necessary financial means. Companies are more likely to get a property loan, but must meet strict requirements, such as many years of positive business development.
The high interest rates for real estate loans in Montenegro represent an additional challenge that needs to be taken into account. Nevertheless, it can be worthwhile making an inquiry with various banks in order to perhaps obtain the desired financing after all. If you are patient and explore all the options, you could be successful in the end and realize your dream of owning a property in Montenegro.
