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Mortgages for Bulgarian Property

What are the differences between UK mortgages and mortgages in Bulgaria? If you are considering obtaining a Bulgarian mortgage, in general it is really no different to the UK. The loan is secured against the property. Application for the loan is made together with supporting documentation for proof of income. The property is valued by a valuer appointed by the bank. Your mortgage will be approved if everything meets the lender's criteria. However, there are some interesting differences which are important to understand!


A Refreshing Attitude

Bulgarian banks are more cautious in their lending than British banks (thankfully) and are "risk-averse". Clients applying for a loan have to have a totally clean credit history. They take the attitude that a mortgage is an opportunity, not a right and they critically assess customer's solvency, preferring to create conditions in which both the bank and the customer remain loyal to each other. The Bulgarian banks are certainly ready to do business but they are not going to offer you ridiculous mortgages. This is good news and is reassuring, reducing the risk element of the property market to both the bank and the property owner.

Affordability Main Criteria

The uk system usually applies income multiples but bulgarian anks generally look at your ability to repay the loan, ie, affordability. Most European banks lend on the basis that your total monthly repayments (capital and interest) should not exceed 35 to 40% of your net monthly disposable income. On 5th January this year many Bulgarian banks introduced the ruling that the applicant should have a minimum of 40% of income remaining after considering living expenses and the monthly mortgage repayment. To give yourself some idea of the maximum you can borrow in France, multiply your monthly net income by 35%. Then deduct from this your total U.K monthly credit outgoings (loans, credit cards, mortgage/rent, divorce/child maintenance payments). The resulting figure will give you a good idea of your maximum monthly French mortgage payment.

A lender may take rental income into account but this is quite rare. Interest only and "buy to let" mortgages are a rarity and if you obtain a mortgage on this basis, the term is often no longer than ten years.

Currency Fluctuations

Bear in mind you may be earning in pounds sterling but will likely be paying in euros - beware exchange rate fluctuations. This adds a relatively thick layer of risk into your investment. With this set-up, you earn in sterling pounds and pay in another currency. The sterling pound equivalent of your debt in another foreign currency will surely fluctuate with time as the exchange rates go up and down. If you are unlucky, and the rates move against you, the sterling equivalent may become so low that you actually end up with so much more debt than you originally had.


When you receive a formal or "in principle" mortgage offer, this offer is usually valid for 30 days. Off plan buyers beware if the completion date of your project is some considerable time away and you rely on an "in principle" offer which is outside it's validity date.

"In principle" offers don't really exist in Bulgaria, you are more likely to be told that you have passed the lender's affordability test. This does not constitute an offer in principle nor a formal offer of a mortgage. After passing the affordability criteria, you will then to go through the whole mortgage process before a formal offer is made.


Bulgarian banks will often value the property at less than the price you are paying, so you could be left having to find the difference. Usually you will not get a mortgage for more than 70% of the bank's valuation of the property.

Many banks will insist on Life Insurance as part of their lending to you.

Monthly Payments

Once you have a Bulgarian mortgage, owners are often surprised by another big difference. With a variable interest rate mortgage, it is common in Europe when mortgage rates change that your monthly payment remains the same.

So, a decrease in the lending rate, whilst it will be passed on to you, will mean you pay the same monthly amount as usual but the interest on that payment is lower and more of the capital is being paid off.

There is nothing that should be left to the chance of miscommunication when you are dealing with finances and mortgages. If the lender does not provide documentation in English, then you should get a registered translator to translate all documents into your mother tongue. Never sign anything until you understand it.

It is always advisable to take independent professional advice to assist you with your options based on your own personal circumstances. Any decision about taking a mortgage should be informed and realistic.