Mortgage

Mortgage loans can be:

• Targeted (Purpose-Specific) – Home Loans. The bank grants the funds for a precisely defined purpose—purchasing a property, reconstruction, finishing works, or refinancing an existing home loan.

• Non-Targeted (Non-Purpose) – Consumer Loans with a Mortgage (to cover current needs). The bank grants the funds without monitoring how they will be spent.

In most cases, property purchases require financing with a mortgage loan. Few individuals have sufficient savings or liquid assets to purchase a property outright. The choice of loan must be informed and consistent with the client’s wishes and capabilities.

The characteristics of mortgage loans, such as credit amount, interest rate, maturity period, credit repayment method, and other features, may vary significantly.

Types of Targeted Mortgage Loans

Loan for the Purchase of apartments, garages, houses, regulated land plots, offices, studios, shops, and other real estate properties.

A purchase mortgage loan finances the acquisition of ownership of both definitively constructed properties and those under construction at different stages of completion, but not earlier than Act 14.

Loan for Renovations, Improvements, Reconstruction of Real Estate

Approved according to a quantity-and-value estimate for construction and repair works or an offer provided by a construction company. Disbursement of tranches may be necessary to ensure the proper use of the funds. The bank may also require cost-justification documents and/or photographic evidence confirming the completed activities.

Loan for Construction and Finishing

Finances construction works of real estate (most often the construction of single-family houses or the finishing of residential properties) according to submitted construction documentation – building permit, approved architectural project, cost estimates, etc.

Home Loans for Bulgarians Abroad

Loans intended for Bulgarian citizens working and/or residing abroad.

The required documentation is determined based on the country where the applicant works.

The required documents are specific to the country where the consumer works.

Important to note: In most cases, the bank requires the documents certifying employment and income to be translated and legalised. A mandatory requirement is the provision of a contact person residing in Bulgaria. There may also be a requirement for a co-borrower or guarantor for the loan.

Home Loans for Foreigners Working in Bulgaria

Banks finance property purchases by foreigners, but under more specific conditions. The required documentation is determined based on the applicant’s country of origin. There are some differences in the required documents for European Union (EU) citizens and those outside the EU. For non-EU citizens, prior consultation with the bank is necessary. The main documents you will need are:

• Permanent residence permit or long-term residence permit
• Proof of official income (from an employment contract or annual tax return – GDD)
• Credit report from the Central Credit Register (CCR) of the Bulgarian National Bank (BNB) and a local credit bureau from abroad
• Certificate of marital status from Bulgaria and from abroad

Loans for Prefabricated Immovable Houses

Loans for prefabricated houses are fully achievable. We note that there are differences in financing the purchase versus the construction of a prefabricated house. Other important criteria are:

• The location of the property is irrelevant for the loan
• The prefabricated house must be permanently affixed (immovable)
• Purchased prefabricated houses must have Act 16

Refinancing Loan

Targeted home loans can also be granted to refinance existing ones in other banks. The goal of refinancing is to achieve better financial conditions for the client. For it to have a positive effect, all expenses related to the cost of the new loan must be calculated precisely (appraisal, notary fees, mortgage cancellation, etc.), relative to the new loan’s price. It is important to calculate the difference in the total amount owed to the banks at the end of the loan term.

Non-Targeted Mortgage (Loans for Current Needs)

The main difference compared to a targeted home loan is that a pre-acquired property serves as collateral for a consumer loan with a mortgage.

The bank does not monitor the purpose-specific expenditure of the funds.

Such loans are usually financed at a lower loan-to-value (LTV) compared to a home loan and often at higher interest rates.

The repayment terms are shorter, and the types of properties that can serve as collateral are sometimes more restricted.

A consumer loan secured by a real estate mortgage is necessary when the client’s desire and/or capability requires a lower monthly instalment (i.e., the loan term must be longer than the maximum terms for an unsecured consumer loan). The same applies when the desired amount is higher than the maximum allowed for an unsecured consumer loan.

Characteristics of Targeted Mortgage Loans

Financing Amount

Standardly up to 85%, but under certain conditions, up to 100% of the market appraisal of the property. Some banks also consider the price in the preliminary contract of sale. Clients have the choice between being liable for their entire property/assets or only up to the amount of the provided collateral.

Purpose

• Financing the purchase, construction, repair and/or finishing works of the acquired residential property
• Refinance existing targeted loans

Term

Up to 35 years

Currency

BGN (Leva) or Euro

Interest rates

Most often: Annual Interest Rate, which is formed by a Reference Interest Rate (a market interest index for the respective currency)* plus a fixed spread (or margin). It is extremely important to pay attention to the description of the spread in the loan agreement—whether it is fixed, and if not, under what conditions the bank could change it.

* Interest rate index for the respective currency – SOFIBOR for BGN, EURIBOR for Euro, LIBOR for USD, GBP, CHF, or another index with a different maturity.

Installment types

Equal monthly instalments (Annuities) and decreasing monthly instalments.

Collateral

• Mortgage on the property being purchased with the loan
• Mortgage on another property
• Financial Collateral

Interest Calculation Method

Actual number of days/360 (Actual/360 basis).

Disbursement Frequency

Single disbursement or in tranches according to an agreed-upon disbursement plan.

Additional Financing (Available at some banks)

• Financing of costs related to the mortgage transaction (notary fees, taxes, other expenses related to the property purchase)

We will help you compare the interest rates, fees, and the final cost (Annual Percentage Rate of Charge – APR). We will jointly analyse the possibilities for the best pricing offer and simplify the application process for your home loan. We will be with you during the collection and preparation of documents, the selection of an appraiser and notary, the notarization of the transaction, and the provision of documents to the bank throughout the entire application process.

We will assist you with filling out the application and submitting it to a convenient branch of the selected bank. If desired and necessary, our mortgage consultant will attend the signing of the loan agreement.

Choosing and deciding to take out a home loan is one of the most important steps we undertake.

Informed client choice is our mission.

WE DO THE WORK, YOU GET THE BENEFITS.