The Bulgarian Mortgage Sector Is Booming - Pr Inside

Recent news from the Bulgarian banking sector confirms what many property investors have known for a while - investment potential in Bulgarian property is one of the best in the world. Not only does capital growth top global rankings, but the Bulgarian mortgage sector is booming.



Data just released by RNCOS - a leading market research company - confirms that the Bulgarian real estate market was the world's strongest in 2007. The RNCOS report, Bulgarian Banking Sector Analysis, also found that Bulgaria's mortgage sector is one of the fastest growing in the banking industry with housing loans accounting for one third of all lending products.

The Bulgarian
mortgage market may be young, but in its short life it has shown remarkable growth. After liberalisation of the mortgage sector in 2004, the Compound Annual Growth Rate (CAGR) increased by a massive 87% between 2004 and 2007 with growth for the period 2007 to 2010 predicted to be at a similar spectacular percentage.

Bulgarian National Bank figures report that Bulgarians took out over €2.5 billion in mortgages over the last year and home loans now account for almost half the loan total (a rise of nearly 25% over the last 3 years).

Not only has mortgage lending seen a massive hike, but Bulgaria has also experienced a huge increase in mortgage products. 'Being able to choose from a variety of products is very important for the property investor,' comments Ken Thorkildsen, Director of Obelisk Private Finance, 'and the choice in Bulgaria has improved almost beyond recognition in the last few years.'

Of particular interest to property investors are products for remortgaging and equity release. Equity release amounts have increased by up to 75% of the appraised value, which allows property investors leverage for other products, therefore providing the opportunity to expand their property portfolio.

Interest-only mortgages are also a vital tool in property investment and while these were previously for a maximum of 2 years, Bulgarian banks are now offering interest-only home loans for up to 10 years. 'This is a real bonus to the Bulgarian property market,' says Ken. Furthermore, banks have recently reduced mortgage tie-in periods meaning investors who sell their property soon after purchase have less to pay in redemption charges. Some banks have cut tie-in periods to just 3 years.

With increased choice in Bulgarian mortgage options, independent financial advice is more important than ever before. 'The investor's maxim should be to minimise borrowing costs and, at the same time, ensure returns are maximised,' says Ken. 'Only a professional financial adviser with up-to-date information can guide you through the myriad of new products available in the Bulgarian sector.'

About Obelisk Private Finance

Obelisk Private Finance's expertise lies in its international approach to financing, recommending products both in the country of residence and overseas. This ensures the most profitable option is chosen whilst guiding each client through the entire mortgage and legal process and advising on the various tax implications.