Mortgages in Bulgaria: can a foreigner get a home loan

The growth of mortgage lending in Bulgaria continues; over 2020 the number of active loans increased by 310 million leva.

This showed that the property market was determined not by the overall state of the economy, but by the availability of favourable mortgage loans on the market. Housing loans in leva have become cheaper, which has led to an increase in take-up. According to official BNB data, the average interest rate on mortgage loans fell by 0.31 percentage points, to 2.69%. Over the last reporting month, April, it decreased by 0.05 points. Servicing costs have also fallen – by 0.42 points compared with 2019.

Lately the following have been encountered more and more often – housing loans, loans for buying property for Bulgarians with income from abroad (European mortgage), for Russians, for Ukrainians and for other citizens who wish to acquire property in Bulgaria.

Any foreigner can buy a home in Bulgaria. The procedure does not differ from the procedure for Bulgarians. Notary fees are the same for everyone, and depend only on the value at stake, not on citizenship. After the transaction, the foreigner must register with Bulstat, and then declare the property with the Local Taxes and Fees Department. Property tax and refuse tax are the same as for Bulgarians.

How a foreigner can take out a loan for a flat in Bulgaria

In theory, there are no obstacles for a foreigner to obtain a mortgage loan if they are buying a home in Bulgaria. However, different banks have different conditions. Some prefer the foreigner to be married to a Bulgarian citizen so that the loan can be arranged in their name. Others require the borrower's employment record in Bulgaria to be no less than 12 months.

The largest banks in Bulgaria where you can submit an application and receive a mortgage consultation:

• UniCredit Bulbank. The largest bank in Bulgaria. It offers 4 mortgage loan products: in leva, in euros, a universal one, and a mortgage for clients without permanent residence in Bulgaria.
• DSK. The second-largest bank in Bulgaria; it offers 5 products: property purchase, construction, renovation, house building, villa. A sum of between 5,000 and 100,000 euros can be granted to foreigners and to Bulgarians with income from abroad. The applicant must be over 21 years old, and at the end of the loan term their age must not exceed 65.
• Poshtenska Banka (Postbank) offers 6 products: in euros, in leva, mortgage overdraft, property purchase, construction, renovation.
• UBB. The third-largest bank in Bulgaria. It offers 4 products: mortgage loan for property purchase, refinancing, loan for current needs, mortgage loan with a fixed interest rate.
• Raiffeisenbank. 
• CCB.
• FIB.

The main differences: what rate and what percentage

The differences mainly come down to the financing percentage.

The maximum financing rate for foreigners is 70%, compared with 80–85% for Bulgarian citizens.

The debt-to-income ratio. For Bulgarian citizens it lies in the 50–60% range, namely the total of all your instalments, including the instalment on the future mortgage loan, must not exceed 60% of net income. For Bulgarian citizens with income from abroad, or for foreigners, this ratio is 30%.

The average mortgage loan financing rate for 2020 is 2.8% per annum. 

How to obtain a mortgage in Bulgaria

Where to start:

• Choose a bank and fill in an application for a mortgage loan for individuals.
• Prepare the documents that the consultant has specified as necessary for the specific transaction.

Subsequently, the property is inspected and a market valuation is drawn up, paid for by the borrower.

The loan application is reviewed by the bank.

Following approval, a loan agreement is signed and the relevant fees are paid.

What are the lending terms for citizens of Russia, Ukraine, the EU and the USA

The purchase of property using a mortgage loan and the requirements for a foreign applicant are considered individually at each bank.

The main issuance conditions:

• employment under a labour contract for no less than 1 year in Bulgaria;
• regular servicing of current credit obligations;
• the property to be acquired with the loan must not be encumbered.

Loan term:

Up to 25 years

Currency:

BGN or EUR

Required documents:

The application documents depend on the client's profile. When preparing them, follow the recommendations of the banking consultant.

Which documents are required in connection with the review of a loan application and the preparation of a loan proposal – an annex to the CONDITIONS for loans to individuals:

• Loan request – standard-form application.
• Information – connection declaration – standard form.
• Identity documents (ID card or passport).
• Certificate(s) of marital status (marriage certificate, court divorce ruling). Original from the municipality of residence, or a copy depending on the document.
• Certificate of the registered property regime (Original from the Registry Agency).
• Certificate on the presence or absence of tax liabilities under Art. 87, para. 6 of the Tax and Social Security Procedure Code (TSPC) for all owners and buyers of the property provided as collateral. In matrimonial property community, this is required for both spouses. (Original from NAP centres.)

Documents confirming the sources of income of the Borrower and the Joint Debtor:

• A certificate issued by the employer reflecting the amount of salary (standard form).
• Confirmation that the salary is credited to an account with the Bank, issued by the employer.
• Persons acting as ET, Ltd. – owners / partners of companies – submit copies of the balance sheet, profit and loss statement, UIC registration, tax return for the previous year, as well as documents on the payment of taxes and social security contributions.
• Persons engaged in freelance activity, private medical practice, other activities and services in relations not connected with employment, confirm their income by submitting copies of the annual tax returns for the previous year; documents confirming the payment of taxes and social security contributions.

Documents reflecting the purpose and value of the object of financing:

• Title documents (the seller's notarial deed and the preliminary contract);
• Cadastral scheme of the built-up property and/or cadastral sketch of the land property (Original from the cadastral office or agency);
• Certificate of encumbrances on the real-estate object. If the building has been constructed less than 10 years ago, a Certificate of encumbrances on the building's plot up to the moment of construction is provided, and additionally a Certificate of encumbrances on the land for the last 10 years on the land (Original from the Registry Agency);
• Tax assessment (Certificate of tax assessment, under Art. 264, para. 1 of the TSPC) (Original from the centres);
• Expert appraisal prepared by a licensed valuer.

Bulgaria Avenue will be glad to take part in bringing your dream of a Bulgarian home into reality. We will refer you to competent specialists who will assist with a mortgage loan in Bulgaria.