Bulgaria: Mortgages

Bulgarian lending criteria

Do I qualify for a Bulgarian mortgage?

To qualify for a mortgage in Bulgaria, a calculation is used to establish whether you can afford to maintain the mortgage repayments. This will automatically happen when you complete the application form, and Conti won’t charge you for this service.

How much can I borrow?

• Calculation based on the valuation or purchase price, whichever is the lower

• Up to 75% of LTV available for house purchase, remortgage or home improvements

• Based on joint net “take home” pay, where joint income is applicable

• Existing liabilities, e.g. mortgage or rental payments, loans, credit card payments and maintenance are taken into account, together with the proposed Bulgarian mortgage payments. All this must not exceed 50% of your monthly net income.

What evidence of income do I need?

If you are employed:
• Your last three month’s payslips
• Your latest P60 or Employers Reference
• Your last three month’s personal bank statements

If you are self-employed:
• Your last three year’s audited accounts
• Your last three month’s business statements
• Your last three month’s personal bank statements.

Example mortgage payments

If, for example, your net joint monthly income is £2,500, 50% of this equates to £1250. If your only liability is your mortgage payment, of say £500, this would leave a balance of £750 for your Bulgarian mortgage repayment.

What types of Bulgarian mortgages are available?

For our latest rates and to see the different types of Bulgarian mortgages on offer, please visit our website or speak to one of our advisers.

• Loans taken out in Euros are available up to 75% of the property’s value.
• The maximum term of any mortgage is 25 years or age 70, this varies on the type of loan.
• Repayment and Interest Only mortgages are available.
• The minimum loan you can take out is €40,000

Essential information for buying properties in Bulgaria

Buying property abroad is not necessarily the same as buying in the UK, there is other essential information you need to be aware of both before and during your property purchase.

• It is advisable to arrange your mortgage finance before agreeing to purchase a property.

• It is of paramount importance to seek independent advice from an overseas solicitor. You must have your own Independent solicitor representing you throughout the purchase. This solicitor must meet the lender’s requirements in respect to representation as “Agent for service of process”.

• Ensure that you have full title to the property on completion and that the appropriate documents are available for the lender. Finance will be granted only for completed apartments where the State Acceptance Commission has issued a valid “Use Permission Certificate”, therefore no staged payment finance is available

• In Bulgaria, although a foreign legal entity (Ltd, joint stock company etc.), is entitled to own land, a foreign national is not. However, a foreign national may have full rights on a building, as they can own the title of a building without owning the underlying land.

• If you are applying for a loan to a Bulgarian company of which you are the beneficial owner, you will be required to guarantee the loan. The lender will expect you to receive independent legal advice from a solicitor in the UK concerning guarantee and indemnity, and confirmation from the solicitors that they have indeed advised you independently.

• You should check with the estate agent and/or your lawyer that you are aware of the costs charged by legal and Government authorities for buying an Bulgarian property. The solicitor may be incorporating costs for assigning the mortgage within his charges, along with the title deeds to the land registry. You should establish the actual cost of these before proceeding with a loan application. The lender will also have their own legal costs for assigning the loan, the cost of which they will normally advise you when they issue the mortgage offer. These associated fees/taxes are typically between 10% - 15% of the properties purchase price.

• The completion will take place in front of an appointed Bulgarian notary, and all representatives of the parties to the mortgage would need to be present unless a power of attorney has been arranged and the lender advised in good time prior to completion. This should be arranged with your solicitor in Bulgaria.

• Bear in mind that if you are intending to be present at the completion to sign all the relevant documents and you do not understand Bulgarian, a translator will be required to respond to the notary, and will also be required to sign the notary deed.

• Lenders will not advance funds to purchase or renovate properties that are currently uninhabitable.

• Properties can be purchased either individually, in joint names or in the name of a company.

• All loans will be in Euros.

© Conti Financial Services Limited 2008

This article is reproduced with the kind permission of Conti Financial Services Limited.

For information and advice on overseas mortgages and residential finance in over 30 countries, contact Conti Financial Services Ltd on www.mortgagesoverseas.com