trouble getting a mortgage

[Chris BG]

Hello All,

Changes in the Bulgarian mortgage market have recently caused lots of upheaval with buyers and developers alike, but you can still borrow and all is not lost.

Essentially, the majority of banks who were previously active in lending to foreigners were also foreign owned, German, Hungarian etc. These banks have had to pull back their funds to support the rest of their core business causing a mass withdrawal on products for overseas owners in Bulgaria.

Now we have now a situation whereby foreigners stand the best chance of getting money from smaller more local banks such as MKB Union bank. However, regardless of the lender your mortgage should only be fully applied for around 2-3 months before completion (either Act 15 or Act 16 depending on your contract),there is little point in paying out the full application fees to a broker before this point as banks will only ever lend once they see can actually see and visit a finished product. If you are keen to find out if you or your purchase qualifies for a mortgage, then you should apply for 'pre-approval' which will achieve an official response from the bank and it should not cost you more than 250 Euros. This step needs to be done anyway so doesn't present any extra cost and is often refundable if not successful, so there is no risk for you.

Don't make the mistake of thinking that banks in Bulgaria are actually valuing properties, the figures they produce simply represent the maximum they are prepared / can afford to risk at the moment, not what the property could actually be resold for.

To give you a clearer picture, we at NewEstate.biz know that the banks will lend a maximum of 400 Euros / sqm in Bansko, 400 / sqm in Sunny Beach and 600 Euros / sqm in the more prestigious areas of Varna / Albena / Golden Sands. If your property is right next to the gondola, on the frontline at the beach etc then there will be some expansion on this, but the days of buying anything for 1,400 euro / sqm and getting 60% on mortgage are over.

My best advise is 1) speak to a broker who is in the UK 2) don't pay to make a full application before you know completion is within a few months. Any broker who sells only a 'pre-approved' mortgage offer for the full application price a year before completion isn't worth talking to.

Hope it helps!

 

[bbq]

All,
Looking at previous message there seems to be a perception that you can no longer get 60% mortgages on any property in bulgaria which is built to a reasonable standard and price. Although I cannot speak for the banks or other developers, I am giving 60% mortgages based on 8-10 years, Euribor plus 1% and only fees are legal fees for setting up the contract which are around 200 euros.
Its a buyers market and we as developers have to look at better ways to serve the customer !
Check out The Pioneer Spa and Resort Centre in Razlog, Pirin Mountain, Bulgaria

 

[Jain and Chris]

I agree bbq - developers must be more creative, so well done you for coming up with offering mortgages

Banks in Bulgaria are lending, there is no doubt. However, they take a more cautious approach to lending than their counterparts in the UK (thankfully). Their approach tends to be more thrifty and encourage thriftiness amongst their customers - no bad thing after all these years of over-spending, over-consuming and over-borrowing.

The key is that you have to be a good customer. Certainly put down 30% deposit and be able to prove you can meet monthly repayments; usually mortgages in Bulgaria are not based on multiples of income.

Anyway, borrowing aside, it is no good signing a contract to buy and then waiting 8 months before applying for a mortgage, nor applying for a mortgage after signing then receiving an "offer in principle" which may only valid for 30 days, as this could leave you in a position where you cannot obtain a mortgage in order to complete on your purchase and honour the contract.

The critical thing if you need to obtain a mortgage in order to buy, is to place a clause into the preliminary contract that the purchase is dependent upon your obtaining a mortgage.

I'm just about to do a whole article on this very thing which will be published this week as I feel it is a very important subject to buyers and these very issues have raised many complaints amongst purchasers.

All the best, Jain and Chris

 

[Ibermaxx]

Pamporovo

Hello
I bought in Pamporovo, Orpheuss Valley 4 stars development, and the construction has stop. I received a leeter from the company who sold me the flat, saying, the construction we be delayed for another year. What should i do ????
Any help.
Somebody bought ion the same complex?

 

[Ibermaxx]

Hello
I also need a 50% mortgage.
I bought in Pamporovo. Orpheuss Valley complex.
Does anybody know a agency dealing with the banks and mortgages for the clients.
Thank you.

 

[jamesbond]

renaisance devolopment sunnybeach,help please

hi

ive just joined today
i bought off plan from mc*******some years ago and was told reciently that the devolper wont be finishing the appartments,we were advised that we would get a discount on a new appartment to the amount lost and we would only need to put down 6 grand
the complex was renaisance in sunnybeach
has anyone bought in this devolpment,
we have now been told that we cant get a morgage from bulgarian bank,even now they say that we will need 30% of the morgage up front
any ideas
how do i start a thread,is there anyone out there that can work for the people ripped off to try get some of there money back

regards
james

 

[Damian George]

Hi James,

have a look at Quest Bulgaria Property and Lifestyle Magazine

seams like Jain is the person to ask most questions at the moment.

Re mortgages - no one is leading anywhere in general and it is tough - good luck though

at the forum title page click new post and away you go

 

[jamesbond]

hi

cant seem to be able to start a thread,cant find new post

 

[Jain and Chris]

Hi James

I received your email just now and have replied. However, though I'd reply on here too for you.

To start a new thread:
When you log in and are at the front page of the Bulgaria property section, just below the two "sticky" posts at the top, you will see a button on the left hand side called New Thread. Click on this and start your thread.

Mortgages:
With the banks across the world having tightened lending, it is most likely that you will need 30% deposit in order to obtain a mortgage. Also, of course, normal lending criteria will apply, such as your earnings, etc.

This is a really unfortunate position on mortgages and lending as many buyers signed initial contracts some considerable time ago when lending was freely available and are now caught in the current banking mess through no fault of their own. However, did you put a clause in the contract you signed, that your purchase was subject to obtaining a mortgage?

Working for people..
Yes, of course, you need to take professional legal advice! A lawyer is your first port of call. If you like you can contact the lawyer who writes for Quest Bulgaria. The company is GPNG Law Firm in Sofia and she is a partner in the firm. Her name is Asja Mandjukova and she speaks perfect English. She has acted successfully for other foreign buyers. Her email is [email protected] . Don't worry if she doesn't reply immediately as she is often in court on cases.

Best wishes,

 

[kmacadam]

We have had a number of enquiries recently regarding mortgages in Bulgaria.

Unfortunately Piraeus Bank who used to be the most efficient to deal with stopped lending in Bulgaria at the end of May.

Every other lender there seems to have shut up shop for the time being.

The only option for a lot of purchasers will be to buy by releasing equity from any UK property they may hold.

 

[Ibermaxx]

Pamporovo trouble

Hello
What about the local bulgarian banks?
Does everything has stopt in Bulgaria now?
I'm planning trip to Pamporovo this outumn to see how everything look down there.
Please, i'm looking for somebody who bought in Orpheuss Valley in Pamporovo.

 

[kmacadam]

The local banks have tended to cease lending to foreigners. It is possible to obtain a mortgage on repossessed property via the bank that repossessed it but only at 40% loan to value. I know this as we have been offered some properties in the past couple of weeks.

As was mentioned in an earlier thread, in future buyers should insist that it is written into the contract that if a mortgage becomes unavailable because of market conditions then the buyer shouldnt suffer or alternatively the buyer be made fully aware of the consequences.

Until the overseas property market is regulated and/or until people allow an independent lawyer to look over the contract BEFORE signing for anything then this will continue to happen.

 

[croatia]

Real estate market is down

As already has seen all around world, the situation is not nice regarding the finances.

You need to dig it up new sources for financing your development.

I recommend you to use professional services to find the way out.

 

[BPAG]

THERE ARE NO MORTGAGES IN BULGARIA AT PRESENT.
Even Bulgarians can't get them.

1. Contact your developer and see if they are able to offer you a finance package.
2. Look for a relocaton that has a finance option.
3. Release equity on your other property.
4. Check the progress of your development carefully; Your problem may not be getting a mortgage but that your developer is insolvent.

 

[Jain and Chris]

BPAG said "THERE ARE NO MORTGAGES IN BULGARIA AT PRESENT.
Even Bulgarians can't get them."

This is not true. There are mortgages available in Bulgaria at present, particularly for Bulgarians. Although foreigners will find it very hard. All banks have tightened lending, not just in Bulgaria but everywhere.

Otherwise, I agree to look for alternative financing options. Contact IFA's (independent financial advisors) and see if they can arrange financing for you.

kmacadam is spot on and something we have been saying for the last five years. Anyone looking to purchase a Bulgarian property and relying on finance to do so, should have a clause inserted into their preliminary contract that the purchase is subject to obtaining a mortgage, before they sign the contract.

Best wishes

 

[BG_Lawyer]

Hello
What about the local bulgarian banks?
Does everything has stopt in Bulgaria now?
I'm planning trip to Pamporovo this outumn to see how everything look down there.
Please, i'm looking for somebody who bought in Orpheuss Valley in Pamporovo.

Dear Ibermaxx,

Bulgarian banks are lending money. The bank credit and the mortgage depends on 2 main factors - your income and the stage of construction works.

If the contsruction works are going to be completed soon the bank decides that the project is not risky and gives more money. If it is on act 14, for and example it is still too risky and the lending sum is less.

 

[kmacadam]

Hi BG Lawyer

Can you let me know which banks are still lending? We only know of Investbank and that only tends to be on properties that they have repossessed.

Kevin

 

[alyna]

There's MORTGAGES IN BULGARIA at Present.

Loans are available up to 80% Loan To Value of the property valuation. This valuation will be done by a valuer on the lenders behalf. The cost of valuation depends on the size of the property.

 

[madison85]

Situation is quite hard it seems.. You might need a good consultant I think.

 

[Smarty]

Bulgarian Mortgages

Well I was lucky enough to be one of the last to secure a mortage for an off plan purchase in Bulgaria (after act 16 was granted),although I beleive that things are opening up a bit now. The lending criteria were however like nothing I had seen before. We have relatively good net income but we had to become pretty much debt free and up our deposit to 40% before the mortgage was secured. Granted is was a relatively more expensive property than most but let me tell you that was and remains hard work.

What really peeves me is that the property was sold by the agent with a "prearranged mortgage" which is not worth the paper it is written on ...if the offer is withdrawn by the bank you have nothing. While noone could forsee the crash so thats my baby, their due dilligence was poor, a lot proved dodgy. O......no!

As tough as their lending criteria were I would highly recommend Piraeus Bank as mortage provider should they come back into the market, Balkan Legal and Finance (UK) as the broker and Home Point BG (Bulgaria) as solicitor all are solid operators with professional service.