Bulgarian Mortgages

Historically investors funded the purchase of their property via cash transactions or by re-mortgaging a UK property.

However, with the accession Bulgaria into the EU in January 2007, Bulgarian mortgages are already available. This trend will undoubtedly continue, with more and more competitively priced products entering the marketplace.

Bulgarian Banks who offer mortgages to foreign investors are DSK Bank, Piraeus Bank, BulBank, First Investment Bank, InvestBank, UBB and PostBank.

The main criteria that are common place with Bulgarian mortgages are as follows:

Generally you will need to put down 30% of the agreed sale price, with most lenders will allowing loans of up to E200,000. The lenders will value the property and it is not uncommon for them to slightly down value a property.. Most banks will also only lend up to the amount of the price declared upon the notary deed.

You will generally need proof of all income and expenditure to qualify for the most competitive products, however, one lender does not require proof, although it is not a self-cert mortgage. Generally if you can prove earning over £15,000 and have a decent credit record then we feel confident of obtaining you a good mortgage.

Mortgages in Bulgaria are more typically more expensive than the UK. This does not mean they are expensive, as in Bulgaria the very best rates are given to foreigners, whilst a Bulgarian may expect to pay nearer 12% interest. Rates tend to be about 7% and fees are generally about 1.5% of the property value.

Currently Piraeus Bank will re mortgage an unencumbered property, but all the Bulgarian banks will not lend if the mortgage is not being used to directly purchase a property.

In conclusion, the Bulgarian mortgage market is new and changing rapidly, lenders, developers and legal advisers all have a lot to learn about how to administer and complete mortgages and also to understand the specific needs of foreign buyers. However, over the next few months, the increase in competition in the marketplace will lead to improved products and services.
Likewise, the accession of Bulgaria to the EU will also force change upon the Bulgarian lenders as they will come under the remit of the EU financial services directive and will be forced to alter punitive clauses such as redemption penalties.