Before a bank approves a mortgage, it checks six things: whether you can afford the instalment, how much of your own money you have, how stable your income is, how old you will be at the last instalment, what SISBON (the Slovenian credit register) shows about you and whether the property is suitable collateral. Some rules are the same at every bank because the Bank of Slovenia sets them; each bank sets the others itself. Those are the reason one bank turns you down and another approves you.
Mortgage requirements at a glance
| Requirement | What the bank checks | Same at every bank? |
|---|---|---|
| Creditworthiness | all instalments together at most 50% of net income, at least €745 must remain | yes, Bank of Slovenia rule |
| Own funds | loan usually at most 80% of the home’s value (70% for other property) | Bank of Slovenia recommendation |
| Employment and income | type and length of employment, self-employment, pension, extra income | no, bank’s own rules |
| Age and term | loan term and age at the last instalment | no, bank’s own rules |
| SISBON | arrears, existing loans, overdrafts and cards | same data, the bank’s own assessment |
| Collateral | mortgage, appraisal, property insurance, often life insurance | no, bank’s own rules |
1. Creditworthiness: how big an instalment you can afford
This is where most applications fail. Under the Bank of Slovenia’s macroprudential rules, all your instalments together may usually be at most 50% of your net income, and after paying them at least €745 a month must remain, plus an extra amount for each dependent. The bank applies whichever limit is stricter. There is more on that amount in the article on minimum living costs.
Example: you earn €1,800 net and have no other debts. Half your salary is €900; after deducting €745, €1,055 would remain, so the limit is €900. At a 3.5% interest rate that means:
| Loan term | No other debts (instalment €900) | With a €250 monthly lease (instalment €650) |
|---|---|---|
| 20 years | about €155,000 | about €112,000 |
| 25 years | about €180,000 | about €130,000 |
| 30 years | about €200,000 | about €145,000 |
The second column shows why it pays to clear small debts before applying. A single car payment cuts the loan amount by more than a quarter. Enter your own figures in the credit capacity calculator; the calculation is explained step by step in how banks calculate creditworthiness.
2. Own funds and loan-to-value
The Bank of Slovenia recommends that a loan for buying a home usually not exceed 80% of the property value. This ratio is called LTV. For other property, such as a flat to rent out, the recommended limit is 70%. For a €250,000 flat you therefore need at least €50,000 of your own money.
Two things surprise most buyers. First, the bank bases the share on the appraised value, not the price. If the appraiser values the flat lower, you cover the difference yourself. Second, own funds are more than the down payment: you also pay for the appraisal, notary, land registry, any agency and tax. We worked out concrete amounts for different prices in how much down payment do I need, and the costs in property purchase costs.
3. Employment and regular income
This is where banks differ most. A permanent contract after the probation period is the easiest case. On a fixed-term contract, some banks require it to run for at least a few more months or to have been renewed already, others approve the loan with a co-borrower. The self-employed usually need a longer business history and tax returns, and the bank counts income from the return, not turnover.
A pension counts as regular income. Other income, such as rent, holiday allowance or work under a service contract, counts only if it is regular and you can prove it. The rules vary, so ask several banks before deciding you cannot get a loan.
4. Age and loan term
You can usually repay a mortgage over up to 30 years. A longer term lowers the instalment and raises the amount you can borrow, but you pay more interest. Banks also set an upper age limit at the last instalment, so the longest term can be shorter for older borrowers. The limit depends on the bank, so check it if you are over 45 and counting on 30 years. A mortgage stress test shows how a longer term holds up if rates rise.
5. SISBON and existing debts
In SISBON the bank sees all your loans, leases, overdrafts and credit cards, and any arrears. Banks often count part of an overdraft limit as a debt even if you do not use it, so it is worth lowering or closing it before applying. Older arrears that have been settled are not necessarily a problem, but most banks take recent ones seriously. You can view your data for free in the Moj SISBON app; how to improve the picture before applying is in how to improve your creditworthiness. If a bank has already turned you down, see the options in a loan when you are not creditworthy.
6. Collateral
A mortgage is almost always secured on the property. So the bank requires:
- an appraisal of the property by an appraiser the bank accepts,
- a clean land registry entry (ownership and condominium status), so the mortgage can be registered,
- a notarial deed or collateral agreement,
- property insurance (fire and other perils), assigned to the bank.
The bank often also requires, or rewards with a discount, life insurance or loan insurance with an insurer. If one income is not enough, two people can take the loan as joint borrowers, which is often better than a guarantor.
Conditions for a lower rate
Besides the approval requirements, each bank has conditions for its lowest rate. Almost everywhere this is a current account with your salary paid in, often also a bank package or insurance with a partner insurer. Without them the rate is usually higher. When comparing offers, include the cost of the account and insurance, which the APRC (EOM) shows best. The mortgage comparison lists the rates of all Slovenian banks with costs included, and what being an existing customer brings is explained in existing customer and your loan.
Documents for a mortgage
The list varies a little between banks, but for buying a flat you usually need:
- ID and tax number,
- payslips for the last three to six months or a pension statement,
- an employment certificate from your employer (tax returns if self-employed),
- the purchase contract or pre-contract,
- a land registry extract,
- the appraisal report,
- for construction also the building permit, estimates and plans.
For renovation and energy-saving work you can also get a green loan at a lower rate. Banks that offer one are in the green loan comparison.
What to do if you do not meet the requirements
If the loan fails on creditworthiness, you have four options: a longer term, a smaller amount with a bigger down payment, a co-borrower, or paying off other debts before applying. If it fails on own funds, a bank may allow a higher share of financing for some loans, but usually with extra collateral such as another property. On employment and age, the differences between banks are so large that it pays to ask several banks before giving up.
How much own money and how big a loan you need for a specific property is calculated in the real estate financing calculator. The whole buying process, from search to moving in, is described in buying property.
