Getting a Bulgarian Mortgage

Financing a property purchase with a Bulgarian mortgage
Bulgaria is a relatively new opportunity for property purchasing and as such the number of finance options are 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. We have independent mortgage advisers and have access to over 6,000 mortgage products, they would be delighted to assist. They can also help with any UK mortgages or mortgages in other countries.

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 our partners 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 €200,000 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.
We soon expect more lenders to enter the Bulgarian mortgage market and we shall be working with them to ensure that we can offer their products to our clients.

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.

We would be delighted to assist with you with your Bulgarian Plans please call us on 0870 720 3210 for details or our partners who are the UKs only specialist Bulgarian mortgage company.