Raising Finance in Bulgaria

Loan to Values

You can achieve 75% of valuation in Bulgaria but this is always 75% of valuation or purchase price whichever is the lower.

Bulgaria Mortgage Product Ranges

You can obtain mortgages for purchase of existing property, re-mortgage of existing property and land. In comparison to most countries where banks only lend to freeholds for apartments the banks will lend against leasehold. Any stand alone properties must be owned freehold for a loan to be secured.

Interest only and capital and interest is available for both property and land purchases.

Interest is linked to the ECB base rate and loans are provided in Euros.

Approval in principles are quick and efficient but you should expect to supply a lot more documented information than would be the case in some countries and originals before completion are likely to be requested.

The biggest difference in the mortgage market to the rest of Europe is that mortgages have to be secured after the purchase legal process has been completed. This means that funds to the seller are not transferred until a few days after the sale completed. The bank provides the seller with a bank guarantee of funds to allow transfer or property and then these funds are transferred a few days later. It is important to check up front the seller will accept this and that they understand you are not a cash purchaser.

You can buy and complete on the mortgage either in your personal name or that of a Bulgarian company. Further documents and added costs will apply in a company structure.

Term

Terms are up to 25 years and most banks will expect to see the mortgage redeemed in full by the time you have reached age 70.

Costs

Total finance and purchase costs will equate to approximately 6% of the purchase price. On top of this you should check the purchase price you agree is inclusive of VAT as VAT is added at 20%. VAT is not payable on land alone.

Your costs will be made up of

Personal legal costs 1%

Notary and registration costs 3%

Mortgage arrangement and application fees 1.5%

Valuation fees 0.50%

You will also be required to cover the legal fees of the bank up to a ceiling amount of �1000.

Currency

Loans are granted in Euros and it repayments must be paid in Euros.

Underwriting Criteria

The banks in general work on net income and an affordability ratio. The bank will expect to see that combined debt payments including the new loan to be taken out do not exceed 50% of your after tax incomes. Rental either from the existing Bulgarian property or investment properties elsewhere will be assessed but not 100% of the income you derive from them. All products are full status there are no self cert products available currently.