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What you need to know about residential loans for Bulgarians living abroad.

21.11.2018

Trends in Real estate

Modern technologies and communication channels have advanced to such an extent that there are no longer any barriers to where we can live. In recent years, there has been a growing interest from the Bulgarians living abroad to buy real estate in Bulgaria.

An annual report shows that banks have registered 55% growth of mortgage loan applications of Bulgarians living abroad. The growing interest is due both to the positive market trends and to the growing number of Bulgarians who have discovered their professional or life realization outside their motherland.

Many Bulgarians who work and live abroad want to buy their own home in Bulgaria. Regarding this aim, they can take advantage of the services of banks that give mortgages specially for them. A large group of buyers track microprocesses in the real estate sector and have already noted an increase in their rental yield. A positive trend is the return of well-educated people, specialists in different areas.

They appreciate the country's development and wish to stay temporarily or permanently on the Bulgarian Black Sea coast, taking advantage of the modern lifestyle of the properties located in a secure complex in close proximity to the sea. In both cases, it is about informed people who are fully aware of what kind of property they want and what purpose they will use it with.

At present, almost all banking institutions grant residential loans to Bulgarians living abroad. An important condition for granting the loan is to establish a mortgage on a real estate and this must be on the territory of Bulgaria. The maximum amount of the grant is equal to the maximum funding applied by the banks. It usually varies between 50% and 80% of the market price of the property provided for a guarantee.

Residential loans for Bulgarians living abroad

This kind of mortgage loans are closely specialized and designed for Bulgarian citizens, working and/or living abroad. An important feature that needs to be addressed is that most banks require  the borrower to have a permanent address in Bulgaria, but there are also such offering mortgage loans to Bulgarians living abroad, who have no permanent residence in the country.

The amount of the loan is determined by the policy of the particular bank. Funding is a percentage to the market value of the property, with a long repayment term and the currency may be Euro or leva (BGN). The maximum loan amount is up to EUR 250,000 (BGN 500,000) for some, while for others, the size limitations are defined as a percentage of the financing relative to the respective value of the real estate and the proven creditworthiness. As we have already noted, this percentage varies from one bank to another.

The maximum repayment loan term is between 15 and 35 years, and the minimum is 5 years. However, in general, no pre-term redemption fee is charged after the first year of the loan period. The settlement is the mortgage on the real estate, as the client can guarantee with all his property or with limited property.

It is possible to require other guarantee, such as cash for a certain period of time. Moreover, some banks require borrowers to designate a contact person in Bulgaria if there is a problem with the application and payment process. This is intended to minimize some risks for both parties, such as the timely receipt or transfer of documentation. In certain banks, the borrower applies with a guarantor, who has to prove income in Bulgaria and guarantee the repayment of the loan.

The necessary documentation is directly dependent on the country, in which the income and the requirements of the selected bank are realized. It is important to clarify that, in relation to the policy of the banking institution, some of the documents issued abroad must be translated and legalized. All banks require a copy of a permanent employment contract with a start date of at least 1 year ago, and in the process of negotiation you will have to present the documents for the property. The loan can be disbursed on a one-off basis or installments, according to the established plan.

Part of the documents depend on your specific client profile, for which you should follow the instructions of your bank consultant. The repayment installment is chosen according to your options and preferences: a declining or an equal monthly one. It may be that a certified document proving that you are a regular payer on your current credits, if you have any. Not all banks require a mandatory life insurance from the borrower. It is a convenience that in almost all banks, you can not just make an on-site consultation in its branches, but you have the option of online inquiries to specify the details. Many banks offer an option for online application and free consultation through skype conference calls.

Conclusion

More and more Bulgarians with permanent income who live and work abroad want to invest in the purchase of a home in Bulgaria. This also determines the need for a loan type, which conditions  meet these Bulgarians‘ specific needs. The particular features of different housing loans for Bulgarians abroad require careful judgment, because this is the real step towards the dream home. For advice on how to borrow and buy a property in Sarafovo South, you can contact our sales department.