Charlotte
21-01-06, 09:45 AM
Below is some general information on Bulgarian mortgages. For investors its important to remember that sometimes the developer will offer different finance options altering the required initial deposit and other key payment points throughout the construction of the property. Its not always the case but usually the developer responsible for the development can offer the most competitive finance options and always certainly worth considering. As always we reccomend discussing your investment strategy with a lawyer, a reputable property agent with experience in the area and even an independant financial advisor.
The Facts about Financing a Bulgarian Purchase
CurrencyEUROCurrent Interest Rate7.5%, variableLoan to ValueUp to 70% of the valuation priceTerm5-15 yearsMinimum AmountEUR 40,000 - No maximum (Generally)StatusFull status only
Borrowers:
All UK and Irish residents will be entitled to the product as long as they are over 21 years old and below the age of 70 at maturity of the loan. Mortgages are also available to companies against the personal guarantee of the company's UK beneficial owners. Other terms may apply for company loans.
Loan Security:
Agreement subject to pledge over company's assets (for company loans) and personal guarantees of beneficial owners (for company loans).
Repayment Method:
Capital and interest, in equal monthly installments
Early Repayment:
For repayment of the mortgage within 3 years of completion an early repayment, expect a fee to be charged. This fee will be approx 3% in the first year following completion, 2% in year 2 and 1% in year 3 of the outstanding balance of loan.
Arrangement feeApprox 1%Building InsuranceFire, Flood and Earthquake Contents InsuranceRecommendedLife insuranceNot required FeesBorrower subject to legal fees, costs, as well as admin and valuation fees. In addition, the maximum Notary fee ever payable is €1,500.
Case Study
It must be noted that the example below is for indication purposes only. A full illustration can be provided by the Financier to customers at application stage. Figures are also a guideline only, as can vary between lenders.
Repayment TypeCapital RepaymentLoan Amount€50,000Term15 YearsInterest Rate7.5%Building & Contents Ins€200 (Required annually)Arrangement fee€500 (1% of loan amount)Application Fee€100Legal Fees€2,000 (Approximation)Notary Registration Fee€300Monthly Payment €299.00 (€53,750.00 over 180 months) *Initial Costs€3,100.00 (Including Insurance) Annual Costs€200.00 (Insurance) ** * Changes in the exchange and interest rates may increase the monthly repayments and the sterling equivalent of your debt. Examples calculated to nearest round number.** Annual Costs shown do not include maintenance, tax and other fees incurred on your property outside the mortgage agreement structure.
Recommended Documents
For Proof of Income:
Copy of your passport(s)
Last 3 months pay slips
Last P60
Letter from employer confirming annual salary and length of service
Bank reference letter
3 months bank statements
Breakdown of assets and liabilities and monthly commitment to borrowings
Self-Employed borrowers:
Previous years tax return
Last 3 years accounts
Letter from accountant confirming your profit figure and taxes as up to date
Proof of income is required in all cases and can be made up of Earned Income, Pension, Investment or Rental Income. Please note however, it is not always the case that the Lender will take all or part of these Incomes into account when determining the maximum loan available. Non-Status / Self Certificated or limited proof of income loans are currently not available.
Your loan is based on your joint net "take home" pay and is calculated on an affordability basis. All your existing liabilities including any mortgage/rent payments, personal and bank loans, credit card payments (if the balance is not cleared on a monthly basis) and any maintenance payments together with your proposed Bulgarian mortgage payments must not exceed 35% of your net monthly income.
Example
Net joint monthly income £2,500 x 35% of that figure is £875 minus existing monthly mortgage payment £300 - No other liabilities. This leaves a balance of £575 for a proposed Bulgarian Mortgage payment.
Please ensure that you have full title to the property on completion and that the appropriate documents are available for the lender. Finance will be granted only for completed apartments where the State Acceptance Commission has issued a valid “Use Permission Certificate”.
In Bulgaria, although a foreign legal entity (Ltd, joint stock company etc) is entitled to own titles of land, a foreign person is not. However, a foreign person may have full rights on an edifice, as he/she may own title of an edifice without owning the underlying land.
You may choose to use the lender’s solicitor in Bulgaria as your own representative. If this is the case, you will need to specify this in the mortgage application. Your relationship with the solicitor will be totally separate from that of the lender and the solicitor.
If applying for a loan to a Bulgarian Company of which you are the beneficial owner, you will be required to guarantee the loan. The Lender will expect you to receive independent legal advice from a solicitor in the UK concerning the guarantee and confirmation from the solicitors that they have indeed advised you independently (both documents included within the Guarantee). Be aware that the Lawyer/Notary may be incorporating, within his charges, costs for assigning the mortgage and you should establish with the Lawyer and/or Notary the actual cost before proceeding with the loan application.
The completion of a Bulgarian mortgage takes place in front of an appointed Bulgarian Notary officer and all representatives of the parties to the mortgage need to be present. A power of attorney will need to be presented to the lender in good time before completion – a draft document will be provided by the lender.
Please bear in mind that if you are intending to be present at the completion to sign all the relevant documents and you do not understand the Bulgarian language, a translator will be required to respond to the Notary. The translator will also be required to sign the notary deed.
http://www.propertyshowrooms.com/bulgaria/property/investment/bulgaria-investment-property-mortgages.asp
The Facts about Financing a Bulgarian Purchase
CurrencyEUROCurrent Interest Rate7.5%, variableLoan to ValueUp to 70% of the valuation priceTerm5-15 yearsMinimum AmountEUR 40,000 - No maximum (Generally)StatusFull status only
Borrowers:
All UK and Irish residents will be entitled to the product as long as they are over 21 years old and below the age of 70 at maturity of the loan. Mortgages are also available to companies against the personal guarantee of the company's UK beneficial owners. Other terms may apply for company loans.
Loan Security:
Agreement subject to pledge over company's assets (for company loans) and personal guarantees of beneficial owners (for company loans).
Repayment Method:
Capital and interest, in equal monthly installments
Early Repayment:
For repayment of the mortgage within 3 years of completion an early repayment, expect a fee to be charged. This fee will be approx 3% in the first year following completion, 2% in year 2 and 1% in year 3 of the outstanding balance of loan.
Arrangement feeApprox 1%Building InsuranceFire, Flood and Earthquake Contents InsuranceRecommendedLife insuranceNot required FeesBorrower subject to legal fees, costs, as well as admin and valuation fees. In addition, the maximum Notary fee ever payable is €1,500.
Case Study
It must be noted that the example below is for indication purposes only. A full illustration can be provided by the Financier to customers at application stage. Figures are also a guideline only, as can vary between lenders.
Repayment TypeCapital RepaymentLoan Amount€50,000Term15 YearsInterest Rate7.5%Building & Contents Ins€200 (Required annually)Arrangement fee€500 (1% of loan amount)Application Fee€100Legal Fees€2,000 (Approximation)Notary Registration Fee€300Monthly Payment €299.00 (€53,750.00 over 180 months) *Initial Costs€3,100.00 (Including Insurance) Annual Costs€200.00 (Insurance) ** * Changes in the exchange and interest rates may increase the monthly repayments and the sterling equivalent of your debt. Examples calculated to nearest round number.** Annual Costs shown do not include maintenance, tax and other fees incurred on your property outside the mortgage agreement structure.
Recommended Documents
For Proof of Income:
Copy of your passport(s)
Last 3 months pay slips
Last P60
Letter from employer confirming annual salary and length of service
Bank reference letter
3 months bank statements
Breakdown of assets and liabilities and monthly commitment to borrowings
Self-Employed borrowers:
Previous years tax return
Last 3 years accounts
Letter from accountant confirming your profit figure and taxes as up to date
Proof of income is required in all cases and can be made up of Earned Income, Pension, Investment or Rental Income. Please note however, it is not always the case that the Lender will take all or part of these Incomes into account when determining the maximum loan available. Non-Status / Self Certificated or limited proof of income loans are currently not available.
Your loan is based on your joint net "take home" pay and is calculated on an affordability basis. All your existing liabilities including any mortgage/rent payments, personal and bank loans, credit card payments (if the balance is not cleared on a monthly basis) and any maintenance payments together with your proposed Bulgarian mortgage payments must not exceed 35% of your net monthly income.
Example
Net joint monthly income £2,500 x 35% of that figure is £875 minus existing monthly mortgage payment £300 - No other liabilities. This leaves a balance of £575 for a proposed Bulgarian Mortgage payment.
Please ensure that you have full title to the property on completion and that the appropriate documents are available for the lender. Finance will be granted only for completed apartments where the State Acceptance Commission has issued a valid “Use Permission Certificate”.
In Bulgaria, although a foreign legal entity (Ltd, joint stock company etc) is entitled to own titles of land, a foreign person is not. However, a foreign person may have full rights on an edifice, as he/she may own title of an edifice without owning the underlying land.
You may choose to use the lender’s solicitor in Bulgaria as your own representative. If this is the case, you will need to specify this in the mortgage application. Your relationship with the solicitor will be totally separate from that of the lender and the solicitor.
If applying for a loan to a Bulgarian Company of which you are the beneficial owner, you will be required to guarantee the loan. The Lender will expect you to receive independent legal advice from a solicitor in the UK concerning the guarantee and confirmation from the solicitors that they have indeed advised you independently (both documents included within the Guarantee). Be aware that the Lawyer/Notary may be incorporating, within his charges, costs for assigning the mortgage and you should establish with the Lawyer and/or Notary the actual cost before proceeding with the loan application.
The completion of a Bulgarian mortgage takes place in front of an appointed Bulgarian Notary officer and all representatives of the parties to the mortgage need to be present. A power of attorney will need to be presented to the lender in good time before completion – a draft document will be provided by the lender.
Please bear in mind that if you are intending to be present at the completion to sign all the relevant documents and you do not understand the Bulgarian language, a translator will be required to respond to the Notary. The translator will also be required to sign the notary deed.
http://www.propertyshowrooms.com/bulgaria/property/investment/bulgaria-investment-property-mortgages.asp