5 Requirements to Get a Loan in Lithuania You Must Be Prepared For

Mortgage loan. @ www.freepik.com

Do you want your dream cosy home or a luxurious SUV for your family? Say no more as in today’s article, we will be discussing credit institutions and their lending requirements. 

You can get anything you want if you fulfil these lending requirements. In Lithuania, it is quite usual to buy property by taking a mortgage loan from credit institutions. The loan repayment can be done in several ways and the loan repayment term can be up to 30 years.

The decision to lend you or not depends upon several factors such as your income, current financial obligations, the value of the property, age, work contract, etc.

If you’re a foreigner then you might also have questions like will they give a loan in Lithuania to a foreigner? Will there be some special requirements to meet as a foreigner?

Well, we will discuss all these factors in detail but before that, let us tell you stats regarding loans given by credit institutions to Lithuanian residents.

The picture looks great as credit institutions have increased their lending to Lithuanian residents by EUR 117.1 million over the month of September and by EUR 1.1 billion since March 2020.

The Lending Requirements

Collateral

Lenders use this process to calculate the value of an asset you currently have which will act as collateral in case you default. Collateral is also called a secure loan which has a lower interest rate compared to an unsecured loan (without collateral).

Credit History

A credit score is a three-digit number that depicts how likely are you to repay the amount. It is calculated from the credit history data in your credit report. Credit History shows your previous record of debt management. It includes past bankruptcy, outstanding debts, previous late payments, and so on.

Work Contract

The work contract is necessary for Lithuania. Its active duration should be at least 6 to 12 months before deciding to get a loan. 

Income After Tax

Income after tax must be EUR 500 a month or EUR 800 as co-borrowers. However, this step also depends upon the value of the mortgaged property.

Down Payment

In Lithuania, Banks require you to pay a down payment of at least 15 per cent. The rules are more strict for foreigners and they’ll have to pay a bigger down payment. Or they might finance only a small percentage of your new house.

Don’t lose hope as you can still get a suitable loan deal by consulting with several banks in Lithuania. These banks will assess your personal details and make you an offer. You can then pick among them.

Important Note

Look out for Government programs as they help you get low-interest rates with much lesser down payment requirements. In some cases down payment isn’t even required. 

In case a government scheme is not available, make sure that the interest rate is not high and the repayment period is ample. Lender comparison sites like Finanpa allows you to compare interest rates when borrowing from credit institutions.

If the repayment period is short then there seems to be no purpose in getting a loan as you will have to pay big chunks back each month to pay off your debt.

Final Thoughts

Having a dream house or an SUV car can be a reality now. All you have to do is fulfil these requirements of the lending institutions and you’ll be good to go. 

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