Bulgaria Mortgage Information
Loans are available up to 70% 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.
1. Seller sends electronically or by fax or by floppy disk to the bank’s solicitor a draft Purchase Deed, a draft Mortgage Deed, ownership documents, plans of the property and Act 16 Certificate for them to be checked and agreed;
2. The seller presents the signed and registered Purchase Deed to the Bank’s legal department in Bulgaria
3. Following the acceptance on behalf of the Bank’s legal department of the above, the buyer or the solicitor acting on behalf of the buyer must present the original Purchase Deed to the local tax authority to register the property in the name of its new owner, paying the transfer taxes at the same time and obtain a Certificate that the buyers have no outstanding tax obligations;
4. Buyer or the buyer’s solicitor collects from the Notary Public the registered Mortgage Deed and the Certificate of Encumbrances now showing that the Bank has first ranking interest in the property and sends these to the bank’s legal department together with the insurance policy document;
5. Upon receipt of the above documents, the Bank’s legal department notifies Piraeus bank London confirmation that all documents have been received and are in order;
6. On receipt of the above confirmation, Piraeus Bank London Branch issues a letter confirming to the seller that a loan has been approved in the name of the buyer for the purchase of the specific property
7. Piraeus Bank, London branch makes funds available as per borrower’s drawdown notice and confirmation from the seller (the two must agree for drawdown to take place.
Fees: Check what legal costs and government taxes you are liable for before committing yourself. Bulgarian lenders fees are usually around 1% of the mortgage amount. The bank legal costs are around 1.2% of the loan amount, usually with a maximum of €1000. If you do use your own solicitor you are also liable for the banks legal costs. You may however choose to use the solicitor appointed by the bank in joint representation against a flat fee of €2000.
As elsewhere in Europe, the transfer is the subject of Notary and Municipal (Local Authority/Stamp Duty) fees. These fees total approximately 2.4% of the value of the transaction and are paid to the municipality in which the property is located.
Typically, owning property in Bulgaria has the added benefit of significantly lower running costs, compared to those in other European countries. The owner of a property is obliged to pay an annual property tax of 0.15% of the declared value of the property (compare that to your UK council tax!!). Amazingly, this property tax also covers all waste-collection fees for your property!
If your property is a part of a residential complex the owner will normally pay a contribution to the Housing Association of about 350 Euro per year – this provides for 24 hour security, cleaning, swimming pool, lighting and maintenance, etc.
All foreign buyers purchasing real estate property must be aware that in Bulgaria there are such terms as "Government Tax Estimation Price" and "Purchase Price". The "tax estimation price" is for the purposes of real estate taxation and is often calculated by the municipality lower than the actual selling (purchase) price.
Bulgarian property vendors will wish for the "Tax Estimation Price" be written into the title deed, and not the actual price which the buyer has agreed to pay. As a result of this common practice there may well appear to be discrepancies between the price written in the title deed and the actual cash consideration paid by our Clients. If our Clients wish that the purchase price to be written in the property title deed they must notify us in advance and we will attempt to negotiate with the vendor of the property on your behalf.