Bulgarian Home Loans, Mortgages and Property Finance

If you are buying a property in Bulgaria, you might need to borrow some money to help pay for it. Here you will find information about mortgages and loans, plus details of special finance schemes that have arisen to combat the reduced number of mortgage products. This section also contains information about how to send money to Bulgaria.

Bulgarian Mortgages and Bulgarian Home Loans

Prior to October 2008, Bulgarian mortgages and Bulgarian home loans were available to foreign (that is, non-Bulgarian) property buyers through several banks in Bulgaria. Banks in Bulgaria do not currently lend money for the purchase of holiday properties. Loans are still available for the purchase of residential property in Bulgaria, although banks are reluctant to lend money to people who are not resident in the country. If you are interested in purchasing a residential property (such as an apartment in Varna, Sofia or Burgas) and you require a Bulgarian mortgage, please contact us for further information.

Special Finance Schemes for Property Purchase

Because it has become much more difficult for foreign investors to obtain a Bulgarian mortgage, we are now offering a range of special finance schemes. These schemes allow investors to purchase a property with a small deposit. The outstanding amount is paid by monthly installments, often at lower interest rates than those charged by the banks.

These schemes are especially useful for purchasers who intend to rent out their apartment. They can fund the monthly installments through rental income received from the apartment.

Long-term Payment Schemes

There are a small number of select properties whose developers are able to offer special finance schemes similar to traditional mortgages.

These schemes are offered in partnership with forward-thinking and innovative developers. They allow purchasers to buy property without the need for a mortgage. The purchaser pays a percentage of the purchase price as a deposit and then pays the rest of the price through low monthly installments over a long period. The repayment period can be as long as 10-15 years, which makes it similar to a Bulgarian mortgage.

The purchaser is allowed to use the property as soon as the agreement is signed and the first installment is paid. Ownership of the property is transferred to the purchaser after all the installments have been paid.

Properties with Long-term Payment Schemes include:

Deferred Payment Schemes

These schemes also allow purchasers to buy property without the need for a mortgage. The purchaser pays a percentage of the purchase price as a deposit and then pays the rest of the price in monthly installments over a fixed term. The repayment period is usually between 1-5 years.

The purchaser acquires the right to use and rent out the property after the agreement is signed and the apartment is completed. The right of ownership is acquired once all installments have been paid.

Here is an example of a 3 year Deferred Payment Scheme:

• Purchase price of apartment= 50,000 Euro
• Deposit of 40% = 20,000 Euro
• Monthly installment (with 7% interest) = 950 Euro
• Total price paid = 54,200 Euro

Properties with deferred payment schemes include:

Owner Finance Schemes

To help buyers and sellers, we have introduced an Owner Finance scheme. Owner Finance schemes have already been used successfully in other countries such as the USA. They allow people, who have only a small amount of cash, to buy property without a bank loan or mortgage. The buyer gives the owner a deposit which is usually between 20% and 40% of the price. The rest of the money is paid in monthly installments. Sometimes the owner will charge a small amount of interest on the money that is owed. Sometimes the owner will not charge any interest at all. (This is known as a '0% Finance' or 'Interest Free' loan.)

As soon as the deposit is paid, and an agreement is signed, the buyer is allowed to use and rent out the property. The buyer becomes the new owner when all installments have been paid.

Properties with owner finance schemes include:

Remortgages and Other Loans

Re-Mortgages

Many people who purchase a Bulgarian property decide to raise the money by taking out a mortgage on their existing home in their own country. This is a very simple and efficient way to finance the purchase of an overseas holiday home. If you don't already have a mortgage on your home, or if you have paid off part of the mortgage, you probably have quite a lot of money (known as 'equity') invested in your home. Banks and building societies in your home country might be offer you a re-mortgage on your home. If you would like more information on re-mortgages on UK property, we can put you in touch with a qualified mortgage advisor (FSA regulated).

Secured and Unsecured Loans

A secured loan is much safer for the lender as the loan is secured against an asset that you own, most commonly your existing home. If you cannot pay back a secured loan, the lender can take possession of that asset and sell it to get the money back. You can often borrow more money with a secured loan that you would be able to borrow with an unsecured loan. The interest rates are sometimes lower than the rates for unsecured loans. However, you must remember that if you fail to pay back a loan that is secured against your home, you could lose your home.

Unsecured loans are safer for you, but not as safe for the lender, as they are not secured against one of your assets. Because of this, you might not be able to borrow a very large amount, and you might not be able to borrow money over a long period. The interest rates might be higher than those for a secured loan. However, it is more difficult for the lender to seize assets such as your home, car or other belongings in order to get the money back.

Sending Money to Bulgaria

At some point during the purchase of your Bulgarian property you will almost certainly have to pay something in Euro or Bulgarian Leva (BGN). Probably, you will have to send money from a bank account in your home country to a Euro or BGN account in Bulgaria. We have teamed up with World First, a well-established UK based currency exchange company, to get you the best exchange rates and fastest international money transfer services. For clients in other countries we can offer advice on how to use an online currency exchange service to send money overseas. Why pay the high transfer fees asked by high street banks and building societies.
Contact us now to save money on your international money transfers.

Further information

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