Loans and mortgages for foreigners in Croatia
by Welcome Center Croatia | Last updated Jan 30, 2022 | Published on Jan 30, 2022
Thinking of moving to Croatia, buying a house or flat, or maybe starting a business here? Or you are already in Croatia for some time, and you decided to grow your roots here in several ways? Thanks to its beautiful Adriatic coastline, European connections, and warm climate Croatia is a true hidden gem for settling down.
Either way, you might need a little push in form of a loan(credit) or mortgage for making your dreams come true. But how does the whole process of getting a loan or mortgage work in Croatia? Can you even do it if you are a foreigner? Or do you need to have a residency permit?
Well, we suggest you read on for all the essentials you need to know, including the basics of housing loans, mortgages loans, and loans for entrepreneurs in Croatia.
How do loans and mortgages work in Croatia?
The whole arrangement of getting a loan is pretty straightforward – the bank is the one that determines if you get the loan/mortgage or not. And the bank of your choice does that by determining your creditworthiness (or “kreditna sposobnost”) based on different criteria which we will get into details in just a few rows.
If you are creditworthy, you have a green light and you can get a loan from the bank.
The creditworthiness is based on your income and debts at the time of application. Basically, creditworthiness is your bank’s assessment of the ability to undertake the obligation to repay the loan on a regular basis.
There is no universal rule on calculating creditworthiness – every case is unique, and it is calculated by the bank’s set of criteria once you apply for the loan/mortgage. You should know that every Croatian bank has its terms & conditions – so your first move would be to go directly to the banks once you decide on the amount and type of loan you want to get.
But, for the calculation of your creditworthiness you must provide these documents to the bank (please note that every bank may have its list of what they require when deciding for approving loans):
- Regular monthly incomes (salary income)
- Amount of additional earnings (that is not a salary)
- If you have any savings or shares in investment funds
- Existing credit obligations - current loan balances; credit card debts; current account overdrafts
- Your employment status and proof of employment
- Your marital status
- Whether you are a current user of the bank’s services
Again, the required information and documentation will depend on the bank you choose.
Can you get a loan if you are a foreigner in Croatia?
Well, like everything, it all depends on the type of credit you are looking for. Loans are much easier to get as a foreigner than mortgages.
Usually, Croatian banks prefer to give loans to foreigners who hold permanent residence in Croatia – it is way secure for them that way, but again it all depends on the bank and type of loan (which we will discuss soon).
For mortgage loans, because it is a much bigger obligation, banks in Croatia will prefer if you receive a regular income to your bank account in Croatia – which means you are working or staying here for a longer period.
There are also banks in Croatia that will provide a loan to a foreigner if they have been receiving a foreign income on their Croatian bank account monthly for at least 1 year and others will give loans only to EU/EEA citizens.
It all depends on the bank – so our advice would be to gather as much information from the bank you choose based on your preferences and type of loan.
Types of loans in Croatia
We can characterize types of loans in Croatia by their purpose and maturity. Loans can be divided to:
- General-purpose loans
- Specific purpose loans
One of the main differences is that general-purpose loans are generally offered with shorter maturities while specific-purpose loans usually have longer repayment periods.
General-purpose loans
General-purpose loans serve for your own needs and wishes – they don’t have to be used for a specific purpose and sometimes they have a higher interest rate than the specific–purpose one.
Types of general-purpose loans
Credit line or overdraft on your bank account
This is not a loan per se but is the most frequently used type of general-purpose loan as it can go to up to large figures depending on the agreement with your bank. The amount of overdraft usually depends on the amount of your regular monthly income.
Cash loans
Cash loans are the easiest ones to get from the bank – they are free to use for whatever purpose you want but the amount usually is not big. Again, you should check with the back on the amount and currency of the cash loan. You should know that the interest rate of the cash loan is usually higher than the one for a specific-purpose loan.
Mortgage loans
These types of loans are cash loans that have real estate as collateral – meaning their amount is high and they are considered risky that is why a bank uses real estate as collateral.
Specific-purpose loans
Specific-purpose loans are loans where funds are granted for a specific intended purpose only. They generally carry a slightly lower interest rate compared to general-purpose loans.
Types of specific-purpose loans
Consumer loans
This type of loan is usually granted because of an invoice for the purchase (like furniture for your new home) of some goods or based on an offer issued by the seller.
Consumer loans can be used for buying various things – from purchasing furniture, household appliances, technical apparatus to car appliances or construction material, etc.
Loans for motor vehicle purchase
As the name of the loan says this is a specific purpose loan used for purchasing
a motor vehicle.
Student/pupil loans
They are granted for the payment of the studying expenses in the country and abroad and may be used to pay for private secondary education school fees.
Housing loans
Housing loans are used for purchase, construction, or even remodelling your apartment (flat) or house.
Mortgage loan vs housing loan in Croatia
A mortgage loan is a loan in which your property serves as insurance (collateral) for a specific (mostly high) amount of money. In case you fail to pay your monthly loan rates to the bank on time, the bank can take your insurance (house, flat…) to settle the debt.
On the other hand, a housing loan is a loan used for buying an apartment (flat) or a house, for your construction costs or reconstruction of the existing house or apartment.
The difference between a mortgage and a loan is that when you take a housing loan the house or apartment is at the same time an insurance instrument and the bank can take it over if you don’t pay your monthly rates regularly.
We must highlight here that you are limited when buying properties with a mortgage:
- Family house or apartment intended for housing, or a house or apartment intended for vacation
- Garage or parking space, which you purchase together with the property
- Land intended for the construction of a property
Currency of the loans in Croatia
Your loan doesn’t have to be in Croatian kuna – you always have the option to get a mortgage loan in a foreign currency. But, regardless of the currency of the loan, your currency is connected to the Croatian kuna.
For example, if you took a loan in euro, you would repay the loan in kuna according to the HNB (Hrvatska Narodna Banka/Croatian National Bank) average exchange rate for the euro valid on the day of repayment.
Loans for entrepreneurs in Croatia
Maybe you are an eager businessperson that wants to invest in your business in Croatia and you are looking for a loan? Well, entrepreneurs are more than welcome in Croatia.
Croatian institutions and some cities offer funding programs and incentives for businesses owned by foreign citizens too.
We are bringing you a list of all the programs offered to Croatian but also foreign business owners in Croatia:
1. ESIF Micro Investment Loan
This type of investment loan is available to Croatian and foreign business owners but with the condition that your company is registered in Croatia.
ESIF Micro investment loan(ESIF stands for Europski strukturni i investicijski fondovi, i.e. European Structural and Investment Fundsis financed from the side of the European Regional Development Fund.
This loan is available via a Croatian state agency that serves as a support for entrepreneurs during all of their business phases called HAMAG-BICRO (Croatian Agency for Small Business, innovation and investment). The agency helps businesses from idea development through launch to commercialization and marketing.
This loan is designed for:
- Existing micro-companies
- Existing small businesses
- Individuals that don’t have a registered business, but want to open one
All details about this program can be found on the official HAMAG BICRO web page - here.
2. ESIF Small Loan
This type of loan is also available to Croatian and foreign business owners whose company is registered in Croatia. ESIF Small loan is also financed from European Regional Development Fund and this loan is also available via HAMAG-BICRO, the state agency.
This incentive is intended for:
- Existing small businesses
- Individuals that don’t have a registered business, but want to open one
The lowest amount of the loan is 25,001 EUR and the highest amount is 50.000 EUR. More details about ESIF small loans can be found here.
3. Employment grants for gaining first work experience/traineeship
This type of loan is available to Croatian and foreign business owners whose company is registered in Croatia who wish to employ a young Croatian citizen.
Employment grants for gaining first work experience/traineeship from HZZ is a state incentive for young people who are Croatian citizens and are starting with their first job.
This incentive is intended for both private businesses and public institutions. More information about the grant for young people in Croatia is available here.
4. Subsidies from the city of Rijeka
Many Croatian cities are giving grants or loans to Croatian and foreign business owners. We will mention just a few of them and the first one is the city of Rijeka which gives grants to companies registered in the Rijeka area.
The city of Rijeka annually offers non-refundable financial support to entrepreneurs living around the area of the city of Rijeka. The incentive is designed for existing small businesses in private ownership with headquarters in Rijeka.
More information about the city of Rijeka’s incentive can be found here.
5. Subsidies from the city of Split
The same as the incentive from the city of Rijeka, this incentive is available to Croatian and foreign business owners whose company is registered in the Split area.
The city of Split has given non-refundable subsidies to small businesses to support employment in the area of Split. The incentive is aimed at existing micro and small businesses.
The amount of the incentive is 30.000 kuna per employee for a period of at least 12 months. All the info is updated on the official web page of the city of Split.
6. Subsidies from the city of Osijek
The city of Osijek also offers great incentives to Croatian and foreign business owners whose company is registered in the Osijek area.
The city of Osijek gives annual subsidies within their program for encouraging the development of entrepreneurship).
This incentive is intended for:
- Existing micro, small and middle entrepreneurs
- Existing craft businesses & limited liability companies
You should regularly check the official web page of the city of Osijek to find out news for annual subsidies.
Which bank to choose for your loan or mortgage?
When thinking about getting a loan or mortgage you should be very thorough with the bank you choose. What do we mean by it? Go to different banks, ask all the questions you have in mind, evaluate the offers and only then decide on the offer that best suits you!
We are bringing you the most popular banks in Croatia that we know have the best options for loans and mortgages:
1. Erste Bank
Erste bank is a part of the Erste Group, which is one of the most prominent companies in the financial sector in Central and Eastern Europe. The list of their services and types of loans can be found here.
They have an extensive list of branches all across Croatia so setting an appointment won’t be a problem.
2. ZABA – Zagrebačka banka
Another popular option for a loan, with conditions for home loans similar to its competitors, is ZABA, also known as Zagrebačka banka.
Zagrebačka banka is a member of the UniCredit commercial bank and one of the leading banks in Croatia. All of their options are clearly explained on their webpage and there is even a loan calculator that can be used for preliminary calculations.
3. Hrvatska poštanska banka
Hrvatska poštanska banka is a Croatian-owned bank that has a partnership with Hrvatska pošta and you can deal with your bank services in a postal office. In that way, Hrvatska poštanska banka became the largest distribution channel of basic banking products and services. All the info about their services can be found here.
4. Privredna banka Zagreb
Privredna banka Zagreb is Croatia’s second-largest retail bank with over 200 branches across Croatia. The bank is part of the Intesa Sao Paolo worldwide group of banks. PBZ offers a variety of loans – from housing, cash, energo to non-purpose loans.
All other info can be found on their official website: https://www.pbz.hr/en/
5. Raiffeisen bank
Raiffeisen bank is one of the most common banks in Croatia and its central bank is originally based out in Austria. This bank is also widespread and known with over 78 branches in Croatia. If you want to know more about their options for loans and mortgages check Raiffeisen’s official website: https://www.rba.hr/en/
OIB - Croatian Identification Number
