Various financial options are available when considering an investment in Bulgarian property. Below is an overview of investment finance available in Bulgaria.
Financing your investment property in Bulgarian is an important decision and could take the form of your own cash resources or, as most serious investors prefer, a mortgage or equity release scheme. Bulgaria offers mortgages for non-residents and modern banking products are widely available.
Variable rate loans only:
6.4%, repayment mortgages
6.7% first year interest only mortgages
Up to 75% for loans greater than €100,000
Up to 70% for loans under €100,000
All UK and Irish residents will be entitled to a mortgage in Bulgaria to finance their property investment, provided they are over 21 years of age or under 70 upon maturity of the loan. Mortgages are also available to companies against the personal guarantee of the company's UK beneficial owners, while other terms may apply for company loans. Non-status loans are not currently available in Bulgaria.
Repayment is in the form of capital plus interest in equal monthly installments while early repayment of a mortgage within 3 years of completion while entail a fee of approximately 3% in the first year following completion, 2% in year 2 and 1% in year 3 of the outstanding balance of loan.
Fire, flood and earthquake
Borrower subject to legal fees, costs, as well as admin and valuation fees. In addition, the maximum Notary fee ever payable is €1,500.
It must be noted that the example below is for indication purposes only. A full illustration can be provided by the financier at application stage. Figures are also a guideline only, as they can vary according to lenders.
Up to 80% of purchase price or valuation (whichever is lower)
6.2 – 9.5%
€200 (required annually)
€500 (1% of loan amount)
€299.00 (€53,750.00 over 180 months) *
€3,100.00 (including insurance)
€200.00 (insurance) **
* Changes in the exchange and interest rates may increase the monthly repayments and the sterling equivalent of your debt. Examples calculated to nearest round number.
** Annual costs do not include maintenance, tax and other fees incurred on your property outside the mortgage agreement structure.
Non-status/self-certificated or limited proof of income loans are currently not available in Bulgaria.
Your loan is based on your joint net income and is calculated on an affordability basis. All your existing liabilities, including any mortgage/rent payments, personal and bank loans, credit card payments (if the balance is not cleared on a monthly basis) and any maintenance payments together with your proposed Bulgarian mortgage payments must not exceed 40% of your net monthly income (Example: net joint monthly income £2,500 x 40% of that figure is £1,000 minus existing monthly mortgage payment £300 - no other liabilities. This leaves a balance of £700 for a proposed Bulgarian mortgage payment).
In Bulgaria, although a foreign legal entity (Ltd, joint stock company etc.) is entitled to own titles of land, a foreign person is not. However, a foreign investor may have full rights on a building, as he/she may own title of a building without owning the underlying land.
If 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 the guarantee and confirmation from the solicitors that they have indeed advised you independently (both documents included within the Guarantee). Be aware that the lawyer/notary in Bulgaria may be incorporating, within his charges, costs for assigning the mortgage and you should establish with the actual cost before proceeding with the loan application.
You must ensure you have the full title to the property upon completion and the appropriate documents must be available for your lender. Finance will be granted only for completed apartments where the State Acceptance Commission has issued a valid “Use Permission Certificate”.
You may choose to use the lender’s solicitor in Bulgaria as your own representative. If this is the case, you will need to specify this in the mortgage application. Your relationship with the solicitor will be totally separate from that of the lender and the solicitor.
The completion of a Bulgarian mortgage takes place in front of an appointed Bulgarian Notary officer and all representatives of the parties to the mortgage need to be present. A power of attorney will need to be presented to the lender in good time before completion – a draft document will be provided by the lender.
If you intend to be present at the completion to sign all the relevant documents and you do not understand the Bulgarian language, a translator will be required to respond to the Notary. The translator will also be required to sign the notary deed.
Investors must remember that sometimes the developer will offer various finance options. This will often entail altering the required initial deposit and other key payment points throughout the construction phases of the property. Usually the developer can offer the most competitive finance options to investors and these are certainly worth considering.
As always, before making a commitment, we recommend you discuss your investment strategy with a lawyer, a reputable property agent with experience in the area and even a financial advisor.
Put simply, equity release is a way of releasing some cash from the home without having to sell up and move house.
If you are in your mid-50s or older and own your own home, you may be able to get a cash lump sum, a regular income, or both, by using an equity release scheme based on the value of your property. These schemes can be helpful in certain circumstances to raise money for a mortgage to finance your Bulgaria property investment.
Not everybody falls into a category and some investors will need to seek alternative finance to equity release or mortgages. There are other borrowing facilities available to investors of property in Bulgaria.
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