Saving time and money are the main advantages of building modular houses, which have become a trend in the real estate market in recent years. As a result of the growing demand for modular houses, banks have started to finance their construction and purchase.

Most banks approve housing loans for the purchase and construction of modular houses. The conditions for a client to apply for this type of loan do not differ from classic housing loans – the client must be a citizen of the Republic of Serbia, employed on a permanent basis for a minimum of six months with the last employer, or have the status of a pensioner. The regular income of the client can be burdened by a maximum of 60% of the installments of all loans, including the installment for the purchase/construction of a modular house.

What distinguishes this type of loan is the property on which the mortgage is established.

According to the words of City Expert credit advisor Snežana Vukmirović, the bank will require that the construction land be owned by the client with all necessary construction documentation secured, as well as that the client secures a property on which the bank will establish a mortgage.

“Most often, this is some other registered property that has no encumbrances and whose market value corresponds to the amount of the loan, usually in a ratio of 1:1.25. The documentation that needs to be submitted to the bank for the loan application also varies,” says Vukmirović.

In addition to proof of income, the client for the loan intended for the purchase and construction of a modular house must provide the bank with a final decision on the approval for construction and a confirmation of the receipt of documentation for the commencement of work. The client is obliged to submit to the bank where they apply for the loan the subject and the estimate of works prepared by a licensed construction engineer from the engineering chamber of Serbia or a legal entity registered for that type of activity, as well as a pro forma invoice or an invoice for the purchase of the modular house issued by the seller of the modular object. Finally, the bank will also require an appraisal of the property’s value, as well as a property list for the object on which it will establish a mortgage as collateral.

What are the maximum loan amounts for modular houses?

The maximum loan amount depends on the client’s creditworthiness and the term for which the loan is approved.

The repayment period for housing loans is 30 years, but there are banks with shorter maximum repayment periods (20-25 years), as well as banks where the maximum amount of the housing loan for the construction of a modular object is limited to 90,000 or 100,000 euros. The minimum participation for this type of housing loan is 20 percent.

If the value of the other property on which the mortgage is established is sufficient, that is, 30 percent or more of the requested loan amount, it is possible to realize a housing loan without participation.