Банкеръ Weekly



The recently adopted Law on Mortgage Bonds is expected to fulfil its major task - to stimulate banks to include long-term mortgage credits among their services. Up to now the main reason for not launching this type of credits was the fact that banks attracted short-term resources which did not allow customers' long-term financing. Now conditions are different because on the basis of mortgage credits' collaterals - real estates, banks can issue bonds which will provide the necessary long-term available funds. The first credit institutions to announce such plans were the Bulgarian American Credit Bank (BACB), DSK Bank and First Investment Bank. All banks preferred real estates and deposits in BGLevs and foreign currency as collateral so far, but given the chance to issue mortgage bonds they will be interested in guaranteeing credits with home estates too.
When banks launch a mortgage loan, they all require insurance and an experts' valuation of the real estate, a notarial certification and mortgage establishment. In order to receive the necessary documents and to pay the inspection costs, Bulgarian Post Bank (BPB) and DSK Bank require a fee of BGL25. United Bulgarian Bank (UBB) requires BGL5 for amounts of BGL5,000 and BGL10 for BGL10,000. The fee required by BACB is BGL15. The annual amount needed for the insurance payment of the mortgaged apartment is about 0.2% of its market value. The insurance must be renewed for the whole credit term and this is a compulsory condition of all banks. The preparation of an experts' valuation costs 0.3% of the market price of the estate. The assessment is carried out by a crediting expert of the bank and costs are to be paid by the borrower. The registration and the notarial certification of the mortgage cost BGN200.
Documents which certify the borrower's income should be presented too. It's important for crediting experts to check the solvency first and then assess the collateral of the loan. That is why the employer has to certify the net income of the borrower. He must be working under a permanent employment agreement. If you apply for a credit and you have income due to rents, fees or you are self-employed, you must prove your income with the respective contract, show documents for advance tax payments as well as tax declarations in accordance with the Law on Individuals' Income Taxation. The funds must be utilized within a 2-week term. Borrowers are expected to present true information to the crediting experts.
In case you have utilized the credit and you are able to pay it off before the contract date expirartion, you have to pay another fee on the amount which remains to be paid - it is 2% for UBB, 2.5% for BPB and 10% for BACB.

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