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Foreign Property Mortgages - 8 things to consider

Bank Accounts - Bulgarian banks will not send the mortgage sums to foreign bank accounts and they will only release funds to a Bulgarian bank account. You need to make sure that your preliminary contract is asking for the funds to be sent to your Bulgarian bank account.

Paying your Mortgage - Unfortunately, the loan being released by the Bulgarian bank is not the end of the process; it is merely the start. You need to pay your mortgage repayment every month.

Do not expect a Bulgarian lender to be understanding if you miss payments by a couple of days - you will be hit by large financial penalties if any of your payment dates are missed.

A lot of Bulgarian banks will not send you bank statements and do not offer intternet banking in English. Again, the services of a mortgage advisor will assist you with this but even so, it is your responsibility to regularly send money to your Bulgarian bank account to repay your mortgage. A regular payment plan through a currency broker is advisable.

Be careful if you are relying on rental income to pay your mortgage; if you do not achieve the expected rental income then you may not be able to pay your mortgage.

Timescales - Finally, a typical mortgage process for foreigners buying in Bulgaria lasts in excess of three months (although timescales are decreasing). Make sure yo leave yourself enough time. Do not wait to enquire about a mortgage when the vendor requests funds as it will be too late.

The above process might sound painful but it need not be. The first thing is to make it clear to the developer/vendor before signing a contract or parting with any money that you will be using a mortgage. Then consult an expert mortgage advisor such as Bulgarian Home Loans prior to making any commitments, to check that you can actually obtain a mortgage.

The fact is that foreign property investment with a mortgage is a far better investment than purchasing in cash but you must be fully aware of the process.