Maria Plamenova, Thursday, 7 November 2013
This article is part of a series of 8 articles about buying property in Bulgaria. The other articles in the series cover the following topics:
Buying a property in Bulgaria through mortgage is a very popular option. A lot of people used it in the period 2000-2009. After this period due to
economic crisis there was a decrease in the mortgages which made the banks think of better offers. At present the annual interest rates for such
are around 6-7% and the Bulgarian banks are more than happy to loan money as a mortgage to foreigners. That is in case of course they supply all the
documents needed for such mortgage. There are a few important things you need to know before starting the procedure.
You should have in mind that the Bulgarian banks do not grant the full amount needed to buy the property. Usually you can get credit which is equal
60-90% of the property value. In most of the cases this amount is 80%. The rest of the amount should be financed by you.
Before applying for a mortgage loan you have to submit a number of documents and pay fees for processing the application, preliminary research and
assessment of the mortgage property.
The fees vary in every bank. An important factor determining the fees is whether you have pre-assessment of your income and property or it should be
done by the bank. The application fees start from 20 euro but can reach 10 times higher levels. Most of the banks have special offers when they don’t
charge application fees so it is good to check that first.
There are some important documents that you need to submit. They include copy of your ID card or passport, certificate of no tax liability,
certificate of marital status. The banks are very strict about the documents that prove income: certificate of gross and net income issued by the
employer, copy of employment contract, tax returns, evidence for paid taxes etc. There is also a set of documents that you need to submit about the
property: preliminary contract with the seller of the real estate; documents that prove the ownership of the property; cadastral plan; market
evaluation prepared by a licensed and designated by the bank appraiser; certificate from the registry office for the absence of encumbrances.
The interest rate offered for Bulgarians and foreigners is the same, and it depends not only on the amount of the loan but also on the currency. At
present it is better to take a loan in euro. The Bulgarian lev is fixed to the euro as part of the currency board which is active in the country
1997 and one euro is equal to 1.95583 leva.
The duration of the mortgage can vary but the most popular loans are for 10-15-20 sometimes even 30 years.
Since the banks have strict deadlines about the usage of the mortgages they allow, it is good to consider negotiating with the seller and applying
mortgage simultaneously in order to meet both the deadline of the seller and those of the bank. It is a common practice in the country to have a
preliminary agreement between the seller and the buyer when they reach an agreement about the purchase. The buyer should insist for at least 45 days
period of this preliminary agreement because some banks in Bulgaria need two weeks to process the documents for the mortgage.
Another important decision you have to make is what type of interest rates to look for. The interest rates can be fixed during the whole period of
mortgage; you can start with lower interest rates (this is usually when you use a promotion offered by the bank); or you can start with higher rates
which decrease with the years.
The mortgage procedure in Bulgaria can be a bit intimidating and complex especially for a foreigner. The number of loans grew so much since the
beginning of the new millennium, and the credit consultants are getting more and more popular. You can use the help of a credit consultant in order
get a better idea what are the offers of the banks, which one best suits you and what is the procedure in order to get a loan. The help of the credit
consultant is free for the applicants but you should be careful and check everything twice.
Using a translator during the process is an additional cost for the foreigners looking for a mortgage loan in Bulgaria but these are wise spent money
because it is important to read carefully the conditions of the loan and to know what you are binding to for the next 15 or 30 years.
Another cost that comes with the mortgage is the fact that the foreigner should be in Bulgaria while the bank is processing the documents. This may
take two weeks, so patience is also important. Another option is to hire a representative, usually a lawyer, for this process but this also goes with
a fee attached.