Buying property in Austria – particularly in the ultra-prime sector – is costly. With Viennese apartments costing anything north of EUR 1 million, liquidity is often at the centre of most real estate purchases in this part of the market.
Being liquid is paramount to ensuring that you can secure property and that property transactions get off the ground smoothly and complete successfully
Even though many property investors buying property are high-net-worth individuals, mortgages for Austrian real estate are commonplace. There are several drivers for this:
- Mortgages can be more tax-efficient than buying a property outright in cash
- Liquidating assets to buy a property in cash is unlikely to make a lot of sense both from a cost of opportunity perspective and often from a fiscal standpoint
- Speed is central to successful property transactions: few buyers will wait for you to ‘create’ the liquidity you need to buy a property outright
The Austrian mortgage market is relatively small compared to the European average, reflecting the small size of the country. Domestic lenders will generally offer finance to anyone buying property in Austria as a foreigner, although most of this will be mainstream property at middle-market prices. When it comes to Austrian mortgages, EU citizens will find it easier to secure financing from local lenders.
In the past, Swiss private banks were the first port of call for high-value (and in some cases, mainstream) Austrian mortgages. The Swiss franc is stable, and interest rates were often lower than those offered by Austrian domestic banks, and this was attractive for some time. However, these mortgage products are no longer offered to middle-market borrowers for a variety of reasons. With the ECB offering 0% interest rates, cheap finance is available more widely, and Switzerland’s banks are no longer the only institutions to offer such competitive financing for anyone buying a house in Austria.
If you want to borrow from a private bank when buying property in Austria, you will likely get the best rates and terms when you opt for an individually negotiated offer. In many cases, you may get the best finance if you place assets under management with a private bank. That said, this is not the only route to the most competitive mortgage rates. If you have diverse assets and you are highly liquid, your broker may be able to negotiate a mortgage with a private bank that doesn’t require you to place assets under management. Enness has access to more than 500 lenders and will secure the best rates and terms for you quickly and in a way that is most advantageous to you.
If you are buying high-value property in Austria, it’s advisable to think about property financing early. At this level, you are unlikely to secure the best deals on the high street, and the more expensive the property, the more you will benefit from a financing package that’s hand-built around your needs.
If you are buying property in Austria as a non-resident, things can be more complicated. Domestic lenders will have a strong preference to see income in euros and may reject you if you have income in one or more different currencies. By and large, Austrian lenders also tend to prefer lending to EU citizens: if you are a citizen of a third country, getting a mortgage from a domestic lender is rarely so straightforward.
While Austrian and EU citizens buying property in Austria will be able to secure mortgages with domestic lenders, doing so doesn’t necessarily mean you will benefit from the most competitive or attractive rates the market has to offer. Private banks, alternative and niche lenders can all provide other routes to lending for Austrian property.
Austrian high street lenders tend to offer package deals when it comes to mortgages. Ideal for the middle market, this type of financing is often less practical for luxury property purchases. Terms can be rigid, and rates are usually one-size-fits-all, with little room for negotiation. If you have diverse assets, significant wealth or complex income, generally speaking, more personalised financing will get you better rates and terms when buying property in Austria with a mortgage
If you are buying a property in Austria, Enness will suggest a variety of financing options for you. Refinancing property in your home country with a domestic or international lender and using the proceeds to buy Austrian property can be one such route.