Will Ross's Page

One of the first things to say about Bulgarian mortgages, apart from the general difficulties in dealing with Bulgarian Bank bureaucracy (which, incidentally SFBG deal with on the client's behalf), is that a mortgage in Bulgaria is no different from getting a mortgage in the UK or elsewher in the world, in that the amount of mortgage a client can get depends on 2 main factors:

1) the client's current (and recent) financial situation,

and

2) The value of the property as assessed by a Valuer appointed by the Lender

Dealing with the first aspect, SFBG works with several Banks here in Bulgaria, but mainly: Alpha Bank, DSK Bank, CSIF/EIBank, First Investment Bank, Investr Bank, Piraeus Bank, Postbank, and Raiffeissen Bank, amongst others. Each lender has different lending criteria and which tend to change regularly. We are based here Bulgaria and constantly keep fully up to date with what lender has the best overall terms. We ask clients to complete a Preliminary Mortgage Enquiry Questionnaire and from the information the client gives to us on this questionnaire SFBG is then able to assess very quickly which Lenders are best suited to the client's financial situation.

Unless a self-certification mortage, as part of the mortgage application process, clients are required to prove their earnings i.e. 6 most recent payslips, and further verified by 2006 - 2007 P60 if employed or self assessment declaration if self-employed.

Also it should be noted that in Bulgaria different lenders use different percentage ratios for Total Net Income : Total Expenditure on other loan repayment commitments, and these vary between 40 and 60%. In other words to qualify for a mortgage loan in Bulgaria, a client's total monthly loan repayment commitments must not exceed 60% of their total net income.

Additionally lending rates and penalties for early repayment of the loan also differ between Lenders and again, knowing a client's investment strategy (i.e. when they might think to sell the apartment) SFBG can help point the client in the right direction of what Lender best suits their investment profile.

As to which lender is best suited to the client's profile, also depends on whether the client is making application as an individual or as a company, as different mortgage products are available in each case.

On the subject of valuation, again things are not much different from the UK in that the valuation is based on several factors, namely:
- construction build quality
- standard of finish when completed
- services and amenities which will be provided, and,
- last, but in no means least...
- the location and the view.

It should be noted that the valuation is as determined by an independent surveyor appointed by the Lender.

In Bulgaria property valuation is always conservative and will always be less than the purchase price of newly completed properties or ones that are in course of construction.

Basically stated what the Valuer for the Lender does is to strip out any amount of the price which relates to the VAT element and also the value of any furniture or other movable items to result in a basic bricks and mortar valuation.

It is this valuation that is used by the Lender in determining the maximum amount they can lend (assuming the financial affordability criteria is met). the maximum loan to value (LTV) we are able to source for clients is 100% if the property is located in one of the main Bulgarian Cities, or, 90% if elsewhere.