Experts from Colliers International, UniCredit Bulbank and FinCity discussed the possibilities for financing the purchase of a house or flat in the first edition of Colliers Studio Imoti video program which is part of the new site of the real estate consulting company www.colliers-residential.bg. The discussion hosted by Tatiana Emilova, Residential Manager in the Estate Department of Colliers International in Bulgaria, concluded that now it is a good time to invest in a new home. The experts encourage customers to seek professional advice before making the final decision.

“It is a good moment for buying a house or a flat and there are several reasons for that. First, there is a wide variety of high quality real estate on the market. Second, the current price levels are very good and the real estate start-up level compared to other Central and East European countries is two to three times lower but will grow in the future. Last but not least, the purchase of real estate in the current moment is rational and in a long-term it is an investment that would protect people’s savings from the negative influence of inflation,” said Martin Gikov, Head of Real Estate Department with UniCredit Bulbank.

According to Ivo Dimitrov, Executive Director of FinCity, there was a stir on the real estate lending market in April. Obtaining a bank loan is feasible if the customer meets the requirements for proven income, own participation and overall debt, he added. The location and the quality of the real estate are also important. Therefore, if possible, buyers should benefit from the favorable circumstances for purchase of a home. “Buyers must be well informed about the condition of the real estate and to carefully think over their decisions, seeking beforehand an advice from specialists who can provide full information about the market possibilities, he said.

Martin Gikov pointed out that an important factor for loan applicants when applying for a mortgage loan is to feel secure enough about their income. Banks pay attention to several factors when they have to asses a mortgage loan application: deed 16 of the real estate, own participation to cover 40-50% of the worth of the house or flat, proving permanent income of the loan applicant. Banks can approve a loan for purchase of real estate that is not complete if they finance the construction works of that particular building, because its completion is guarantied.

According to Ivo Dimitrov banks give loans although the requirements are stricter. Some banks are more active, the requirements of others are more difficult to meet. Every bank assesses the risk it can assume at that moment and hence adjusts its offers. He gave an example that about an year ago a three-member family with insurance income of BGN 850, actual net income of BGN 1,800 and undeclared rent could obtain bank financing in the range of EUR 70-80.000, now the amount would be not more than EUR 30.000 – “the more conservative” levels from five years ago.

Another issue discussed by the experts was the high interest level in Bulgaria compared to the EURIBOR. Martin Gikov commented that the loans in the country are more expensive because the Bulgarian banks have no access to resource at the level of EURIBOR. The price of the resource for the banks includes Bulgaria’s credit risk (so called Credit Default Swap), which increased substantially, around 10 times, since the beginning of the crisis. The price of external financing for the banks becomes comparable to the interests on deposits of individuals.

Contacts:

Ekaterina Ancheva, Senios Manager Communications, UniCredit Bulbank, +359 2 9264 963

Maya Klevtsova, Marketing Consultant, Colliers International, Bulgaria, + 359 2 976 99 76