Guide to Bulgarian Mortgages

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Bulgaria Overview

Bulgaria offers the visitor and investor beautiful landscapes, golden sandy beaches, and an ideal summer temperature. The twenty-eight provinces of this South Eastern European country form the Northern corner of the Balkan Peninsula . To the tourist, Bulgaria has a fascinating history and culture, a vibrant city life in Sofia , a range of activities to relax into and enjoy. A friendly local population and delicious local food only add to the experience. Bulgaria joined the EU in 2007, making property an attractive reality for foreign investors, and with great air links throughout Europe , there is no shortage of buyers.

Guide to Bulgarian Mortgages

In Bulgaria , mortgage loans are available in Euros only. Offered at terms of between five and fifteen years, Bulgarian mortgage loans have no maximum, and a 40,000 Euro minimum.

Arrangement fees for Bulgarian mortgages are charged at 1 per cent. Depending on your Bulgarian mortgage, if you redeem within three years of completion, a fee of 3 per cent applies in the first year, 2 per cent in the second year, and 1 per cent in the third year. Bulgarian mortgages are offered on a capital and repayment basis only.

In Bulgaria , mortgage loans are provided at a maximum of 70 per cent of purchase price or valuation, whichever is lower. The applicant for the mortgage is responsible for paying for all charges, legal fees and valuation fees. In order to secure a mortgage loan on a Bulgarian property, borrowers must provide full proof of income and outgoings. Furthermore, buildings insurance for fire, earthquake and flood is compulsory.

The current interest rate on Bulgarian Properties is 7.5 per cent.

Other costs of Bulgarian Mortgages

Foreign borrowers in Bulgaria face other legal and tax costs, beyond lender arrangement fees. The legal costs, for instance, can stand at around 1.2 per cent of loan amount, up to a maximum of €1000. Furthermore, you are liable for the legal costs to the bank. Most borrowers use the solicitor appointed by the bank for a flat fee. The transfer of funds also incurs the Notary and Municipal (Local Authority/Stamp Duty) fees. These fees total approximately 2.4% of the value of the transaction and are paid to the municipality in which the property is located.

Typically, owning property in Bulgaria has the added benefit of significantly lower running costs, compared to those in other European countries. The owner of a property is obliged to pay an annual property tax of 0.15% of the declared value of the property. Amazingly, this property tax also covers all waste-collection fees for your property! If your property is a part of a residential complex the owner will normally pay a contribution to the Housing Association of about 350 Euro per year – this provides for 24 hour security, cleaning, swimming pool, lighting and maintenance, etc.

All foreign buyers purchasing real estate property must be aware that in Bulgaria there are such terms as "Government Tax Estimation Price" and "Purchase Price". The "tax estimation price" is for the purposes of real estate taxation and is often calculated by the municipality lower than the actual selling (purchase) price. Bulgarian property vendors will wish for the "Tax Estimation Price" be written into the title deed, and not the actual price which the buyer has agreed to pay. As a result of this common practice there may well appear to be discrepancies between the price written in the title deed and the actual cash consideration paid by our Clients. If our Clients wish that the purchase price to be written in the property title deed they must notify us in advance and we will attempt to negotiate with the vendor of the property on your behalf.