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Mortgage
MORTGAGE IN BULGARIA
MORTGAGE
Bulgaria is a relatively new opportunity for property purchasing and as such the number of finance options is still very limited. This article will briefly explain your options and make you aware of a couple of areas where you should be vigilant.
If you are not able to purchase in cash (although buying in cash is not always the best option for a property investor) then you are left with two main options:
1) Secure a mortgage against UK property and buy in cash.
2) Secure a mortgage against a Bulgarian Property.
The first option is nearly always going to be the cheapest. UK mortgages can be around 4.5% and you can often remortgage and raise extra money with very few charges.
The second option of securing a mortgage against a Bulgarian property is a relatively new phenomenon and as such there are currently only three possibilities. These are provided via the Greek bank Piraeus and the two largest Bulgarian banks DSK bank and BulBank. The DSK mortgage is only available via Bulgarian Home Loans and is far easier to obtain than the other mortgages. If you are a UK citizen and earn a combined provable income (by a payslip or a bank statement) of at least £15,000 and have a clean credit record then you would qualify for a Bulgarian mortgage of up to ˆ200,000 The interest rates are between 6%-7% variable and they are available on repayment only for a term of up to 20 years with a 70% mortgage of the properties value available.
So those are your options, but what about the dangers?
Firstly Bulgarian mortgages can take up to 12 weeks to complete and hence you must start the work early. Do not commit to complete on a Bulgarian property and expect a mortgage to be ready if you have less than 12 weeks. The charges for delaying completion can often be high.
Secondly, do not agree to purchase a property in Bulgaria or part with any non refundable fees until you are confident you can get a mortgage or raise sufficient cash. No matter how urgent the sales agent says it is, you should never part with non refundable monies until you have sorted out your finances. Sales agents can make it sound like it is easy to get a mortgage when the truth can be very different, this is not underhand just that they are not experienced in the mortgage market.
Thirdly, many property sales in Bulgaria are off plan and hence you will have to often pay not only a deposit but also staged payments. The DSK mortgage will meet staged payments but only for approved developers, so again make sure you are aware of your options before going ahead. Once the property is completed you can then always take a mortgage out for 70% of the valuation and repay money borrowed to make staged payments. Just make sure you have a plan. Be aware that in Bulgaria the valuation of the property is often lower than the purchase price and hence you may have to pay a larger sum using your own cash.
Finally, the process of getting a mortgage in Bulgaria is different to that in the UK, you will often need power of attorney to be in place in Bulgaria to sort out property insurances, completion of the mortgage and other legal requirements, this can be uncomfortable as giving someone power of attorney is rare in the UK but it is common place in other countries.
MORTGAGE PRODUCTS
The current Bulgarian Mortgages available for Non Bulgarian citizens are as follows:
click here to go to DSK Bank
The largest retail bank in Bulgaria, DSK are the first Bulgarian bank to actively target the UK market.
More info about DSK Bank Bulgarian Mortgages Product...
click here to go to Piraeus Bank
Piraeus is a Greek bank who was the first lender to enter the market.
More info about Piraeus Bank Bulgarian Mortgages Product...
click here to go to BulBank
Bulbank is one of Bulgaria’s largest retail and corporate commercial banks, and is part of the UniCredit Group.
More info about BulBank Bulgarian Mortgages Product...
Bulgarian Home Loans, the UKs only specialist Bulgarian mortgage company, would be delighted to assist with your Bulgarian Plans.
| Piraeus Bank | DSK Bank | Invest Bank | First Investment Bank | UBB | BulBank |
Loan to Value | 70% | 70% | 70% | 70%-80% | 60% | 65% | Availability | Purchase and Remortgage | Purchase Only | Purchase Only | Purchase Only | Purchase Only | Purchase Only | Interest Rate | 7% Variable | 7% Variable | 9.9% | 5.99% 1ST year
Then either 8% or 9.5% | 5.95% for 3 years then 7.95% | 7.58% | Currency | Euro only | Euro only | Euro, BGN | Euro, BGN, USD | Euro | Euro, BGN, USD | Term | 5-20 years | 5-20 years | 5-15 years | 1- 20 years | 5-15 years | 0-15 years | Loan amounts ˆ | 25K min – No max | 5K min – 200K max per loan | No min or max |
5K min – no max | 7.5K – 150K | TBC | Status | Full status | Affordability only | Non status | Affordability only | Full status | Affordability | Total credit limit ˆ | Unlimited if fit strict criteria, multiple loans allowed. | 300K max, only 1 mortgage for 1st 6 months | Unlimited | Limited by affordability | Limited by affordability | Limited by affordability | Available to | UK & Irish, individuals or Bulgarian Ltd company | UK only, individuals only | Any country for individuals and BG companies | Any country for individuals and BG companies | EU, USA & Canada for individuals and BG companies | Any country, individuals only | Repayment method | Repayment only | Repayment only | Repayment or Interest Only | Repayment only | Repayment only | Repayment only | BHL upfront fee | £176.25 | £176.25 | £176.25 | £176.25 | £176.25 | £176.25 | BHL application fee | £176.25 | £176.25 | £176.25 | £176.25 | £176.25 | £176.25 | BHL completion fee | £235 | £235 | £235 | £235 | £235 | £235 | Arrangement fee | 1% of loan | 1.3% of loan | 2.5% of loan | 2% of loan | 1% + 0.5% per annum | 1% + 0.25% per annum | Banks legal fees /p> | ˆ1,200 or ˆ2,000 if they also do your legal work | Nil | Nil | Nil | Nil | Nil | Valuation fees | variable | ˆ500 | £200 | £200 | £200 | £200 | Insurance | Buildings compulsory | Buildings compulsory | Buildings compulsory | Included | Included | Included | Redemption penalties | 3% yr 1, 2% yr 2, 1% yr 3 | 5% for term but soon to change for existing and new cases | 0% on sale, 4% on refinance
| 5% for life of loan | 5% for life of loan | TBC | Staged payments | Completed properties only | Available on approved developments or if you can take ownership at roof level | Yes | Yes but only for loans of up to 70% | Yes | Completed properties only | Bank Account | Not mandatory | Mandatory with DSK | Mandatory with Invest Bank | Mandatory with FIB | Mandatory with UBB | Mandatory with BulBank |
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