David Fuller: How long have mortgages been available for overseas buyers in Bulgaria?

Steve Andrews: Mortgages in Bulgaria are still a relatively new opportunity. It was only at the tail end of 2005 that the first mortgage to a foreigner was granted by a Bulgarian lender. This was granted by DSK Bank (one of the largest banks in Bulgaria). The first mortgages to foreigners was actually granted by the Greek bank Piraeus (which has branches in Bulgaria and a head office in the UK). Piraeus only started lending in late 2004. Due to these two banks entering the market the floodgates are now open with many more Bulgarian banks either recently entered or about to enter the market.

David Fuller: Has the introduction of mortgage products in Bulgaria had a big impact on the number of Brits now interested in buying a property in the country?

Steve Andrews: The demand for property in Bulgaria has been high for a number of years now, the introduction of mortgages has continued to support that interest as property prices have increased, with more investors requiring a mortgage to finance their dream. Also professional investors are now looking to use Bulgarian mortgage products to gear their investments, maximising their investment potential as they have done in the UK.

David Fuller: What options do people looking at taking out a mortgage in Bulgaria have in terms of how much they can borrow, repayment period, etcetera?

Steve Andrews: Generally you will need to put down the first 30 per cent of the agreed sale price. Most lenders will allow loans of up to 200,000 euros with some lenders having no maximum loan amount. The lenders will value the property and it is not uncommon for them to slightly down value a property and hence sometimes you may need to contribute more than 30 per cent of the price of the property. Most banks will also only lend up to the amount of the price declared upon the notary deed. We do know of some lenders who offer 75 per cent and 80 per cent loan to value. Typical loan periods are for between of five and 25years.

In terms of whether you will qualify for a loan, we now have such a range of lenders that we feel that we can get a loan for almost every applicant. One of our lenders needs no proof of income at all, whilst at the other extreme to qualify for the very best products you will need to prove all income and all expenditure. Generally if you can prove you're earning over £15,000 and have a good credit record then we feel confident of obtaining you a good mortgage.

Regarding the question of how expensive Bulgarian mortgages are, I would say slightly more expensive than in the UK. Rates tend to be about 7 per cent and fees are generally about 1.5 per cent of the property value. Bulgarian Home Loans also charges £600 + 0.5 per cent of the loan amount payable in three stages for the processing.

David Fuller: Are there any potential pitfalls when looking to take out a mortgage in Bulgaria that British buyers should be aware of?

Steve Andrews: Bulgarian mortgages have only been around for both Bulgarians and foreigners for a couple years now, and therefore they are not as advanced as the UK system which we are used to. British buyers need to be aware that there are fairly limited mortgage products and slow processing times in comparison to a typical UK lender, the market has come along way in two years and we continue to work with banks, but this will be an ongoing process.

The amount of mortgage that you can raise against a property in Bulgaria is dictated by the lower of either a percentage of the value of the property (commonly 70 per cent) or the purchase price on the Notary deed. It is common that the banks' expert surveyors will not value a property at the same price as you are purchasing it for. You should, therefore, expect to have to make a larger deposit than the mortgage particulars dictate, so it is very important that you do not over stretch yourself financially.

If you are buying an off-plan property it is common to have to make staged payments during the build process. Although some banks do offer staged payments this is a new and relatively untested product addition and hence you should be prepared to make all the staged payments out of cash and then recoup this money when the bank lends on completion

David Fuller: Do you envisage more mortgage products and options becoming available in the future now that Bulgaria is in the EU?

Steve Andrews: We are confident that over the next couple of years the Bulgarian banks will start to offer more competitive mortgages. When they do we feel this will cause property prices to increase. Some of our lenders are now offering short term rates of under 1 per cent and long-term rates of about 6.5 per cent. The impact of the EU will definitely increase the amount and the quality of mortgage products in Bulgaria, with the open market there will also be interest from the other European banking organisations in Bulgaria, we have just recently launched a new product from an Austrian Bank, Raiffeisen, which will hopefully encourage more lenders to enter the Bulgarian lending market.