Mortgage Loans in Bulgaria: BNB Requirements and Steps to Closing the Deal

On 11 September 2024, the Bulgarian National Bank announced requirements for household loans secured by residential property in Bulgaria. They take effect on 1 October 2024 and are mandatory for banks:

• Loan-to-value (LTV) – the ratio between the loan amount and the value of the property at the time of granting may not exceed 85 percent.
• Debt service-to-income (DSTI) – the ratio between the borrower's monthly debt payments and disposable income at the time of granting may not exceed 50 percent.
• Maturity – the maximum term of the loan agreement may not exceed 30 years.

The 85 percent cap means that you must pay at least 15 percent of the property's value from your own funds. On top of that, add the transaction costs – local tax, notary fee, registration fee, agent commission – and the costs of the loan itself. In practice, it is advisable to have savings that cover significantly more than the minimum 15 percent.

The 50 percent limit on debt relative to income sets an upper bound on the monthly instalment. If you have other loans, their instalments are also included in the calculation. Extending the term reduces the instalment, but it cannot exceed 30 years.

The choice between a fixed and a variable interest rate also matters. A fixed rate gives you a predictable instalment for a set period, while a variable rate follows the market – it may fall, but it may also rise. Ask the bank how the interest rate is determined after the fixed period ends, and calculate your instalment under a less favourable scenario.

The BNB allows a limited deviation: banks may grant loans outside the requirements up to 5 percent of the new and renegotiated residential loans for the previous quarter. Do not count on an exception – plan according to the general rules.

• Calculate your budget – own funds, affordable instalment and transaction costs.
• Request a preliminary creditworthiness assessment from several banks and compare the total costs, not just the interest rate.
• Sign a preliminary agreement with the seller with a sufficient period for the loan to be approved.
• The bank commissions a valuation of the property and checks the ownership documents and any encumbrances.
• You sign the loan agreement and the notarial deed for the purchase; the mortgage in favour of the bank is created by a notarial deed and registered in the Property Register.

The contractual mortgage that secures the loan is concluded in the form of a notarial deed. It specifies the creditor and the debtor, the property, the secured claim, the maturity date and the interest. According to the Registry Agency, a mortgage is effective for a period of 10 years from registration and can be renewed before it expires; more than one mortgage may be registered on a single property, each ranking in its own order.

The registration fee is collected under the Tariff of State Fees Collected by the Registry Agency. After the loan is fully repaid, the mortgage is discharged, and half of the collected registration fee is due for the discharge (Art. 3 of the Tariff).

If you already have a residential loan in leva, from 1 January 2026 it is considered a loan in euro and has been converted at the official rate of BGN 1.95583 per euro. According to the official portal evroto.bg, in the case of a fixed interest rate the bank must continue to apply a fixed rate, and in the case of a variable rate it must convert it using a methodology that guarantees an equivalent interest payment. The introduction of the euro cannot be grounds for less favourable terms for the customer.

Read carefully the pre-contractual information that the bank provides you with, and compare it across several banks. Pay attention to the annual percentage rate of charge, management fees, mandatory insurance and the terms for early repayment. Our calculator in the mortgage loan guide will help you see how the loan amount, interest rate and term affect the monthly instalment.

• Bulgarian National Bank – requirements for loans secured by residential property (11.09.2024)
• Registry Agency – How to register a mortgage
• Tariff of State Fees Collected by the Registry Agency (Art. 2 and Art. 3)
• evroto.bg – Questions and answers for citizens

This article is not legal or tax advice. The information is general and current as of the date of publication; the loan terms are determined by the specific bank.