Bulgaria is a comparatively new opportunity for property purchasing. The number of the finance options are still very limited. This article will shortly explain your options and make you aware of a couple of areas where you should be wakeful.
If you are not able to buy in cash (although purchasing in cash is not always the best choise 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 property in Bulgaria.
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 and as such there are currently only 3 possibilities. These are provided via the Greek bank Piraeus and the two largest Bulgarian banks DSK bank and Bul Bank. 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 the options, but what about the dangers. Please read the information below.
First - 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.
Second - 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 it is, you should never part with non refundable monies until you have sorted out your finances.
Third - 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.
If you are not able to buy in cash (although purchasing in cash is not always the best choise 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 property in Bulgaria.
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 and as such there are currently only 3 possibilities. These are provided via the Greek bank Piraeus and the two largest Bulgarian banks DSK bank and Bul Bank. 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 the options, but what about the dangers. Please read the information below.
First - 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.
Second - 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 it is, you should never part with non refundable monies until you have sorted out your finances.
Third - 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.