If you’re considering a mortgage loan, one of the critical questions you need to ask is, “What should my income be?” Before taking that step, however, it’s important to consider a few other things. Does your income cover the monthly payments, taxes and other loan costs? Can you afford to make these payments if there are changes in your income or expenses?
When obtaining a mortgage loan in Bulgaria, most lenders require applicants to have an annual salary of at least BGN 25,000 (approximately EUR 12,500). Depending on the specific bank and the borrower’s credit history, this number may be higher or lower. Unfortunately, self-employment income is generally not accepted as proof of regular income by major banks.
In addition, some other factors such as housing cost ratio (HCR), debt to income ratio (DTI) and disposable income can affect a borrower’s eligibility for a mortgage loan. The HCR is an estimate of how much of your income you can spend on your mortgage each month. It usually varies between 30-50%. The DTI shows how manageable your debt is in relation to your income. In Bulgaria, lenders aim for a DTI of no more than 35%. Finally, disposable income shows how much money you have left after you’ve paid all your expenses and debts, including your new mortgage payment.
Lenders may also require borrowers to provide proof that they have sufficient funds to cover any unexpected changes in their income or expenses, such as a job loss or an increase in housing costs. This is known as a “stress test” and most banks require this before approving a loan application. The stress test usually involves providing documents showing that the borrower can cover his loan payments for at least two years, even if his income or expenses drop significantly.
Before starting your property buying journey, it is wise to decide what amount you can budget for. Consider both available funds and any additional loans that may be required from various financial institutions such as building societies, banks or other lenders. Be sure to research whether it is possible to get a loan and for what amount to acquire the home of your dreams!
Consistent loan repayment is critical to any financial transaction, and no one likes to be threatened with legal action because they can’t pay. Fortunately, some building societies now offer a certificate which guarantees that the buyer will receive the funds on their loan, provided all the conditions are met. You can even get this guarantee before you start looking for a suitable property – providing an extra level of security in terms of investment decisions.
Before deciding on the amount to invest in a property, consider any additional costs you may face. Make sure your budget is substantial enough to cover all associated costs. They include:
● Survey fees
● Appraisal costs
● Land registry fee
● Costs related to legal advice for the buyer.
Minimum income for a mortgage loan
Not sure if you qualify for a mortgage loan? Let’s quickly calculate your minimum income to determine whether or not it’s an achievable goal so you don’t exhaust yourself unnecessarily.
In order to give a fair assessment, we will make an average assessment of the credit policy in the different banks, since we are not able to check each one individually. The typical practice is to calculate the amount of the loan based on the highest possible installment, proportional to the borrower’s income level.
Most banks calculate the maximum repayment amount by taking a percentage of your income – usually 50-60%. For example, if you earn BGN 1,000 every month, your monthly contribution cannot exceed BGN 500-600, in order to have enough funds to buy basic things.
This is the standard calculation and at the same time banks may need to know the minimum monthly income of each family member, if any. Simply put, if your salary is BGN 2,000, the monthly contribution should not exceed BGN 1,100.
With our loan calculator in hand, we can calculate the minimum salary you need to qualify for a mortgage loan. The calculations will make understanding the exact income requirement easier than ever. So let’s take advantage of this tool and find out exactly how much money is needed!
Are you thinking of taking out a loan for BGN 150,000 and want to know the minimum required income? Then check out our loan calculator below! After doing the calculations with a repayment period of 20 years (240 months), we found that your monthly payment will be an affordable BGN 823.
To calculate your minimum income for a mortgage loan, we will multiply the amount by 60%, which is the minimum that some banks will offer. For example, 823 x 60% = BGN 1316. If you don’t already have many loans and lawyers chasing you, this should be enough to get you approved!
However, there is no need to worry; most often, banks finance between 80-90% of housing loans. This means you’ll just require a 10 to 20% down payment on the balance – not much compared to getting a house against a mortgage!
Is it possible to get a mortgage loan while earning minimum wage?
In today’s economy, many people are barely making ends meet. They strive to meet the basic criteria for obtaining a mortgage, but sometimes this is not enough. One of their pressing questions is: Can they secure a loan while earning minimum wage?
Of course, you can get a mortgage on minimum wage – but there are a few things you need to understand beforehand. Typically, the interest rate will be higher than someone who makes more money because lenders take more risk when lending to people with lower wages. To cover their potential losses from the risk of late or missed payments, lenders will charge a higher interest rate.
Second, you may need to make a larger down payment to make the lender feel more secure. Lenders want to know you’re invested in the deal so they can make sure you can keep up with your payments. Having a larger initial investment in the property demonstrates to them how serious and responsible you are about your loan obligations. This will help ensure timely repayment of your installments every month.
Before applying for a loan, you should be prepared for the higher monthly payments that come with it. As the interest rate increases, so will your monthly expenses – if you are not prepared and have not budgeted properly in advance, this can cause financial difficulties in the future. So be sure to plan for more funds each month when preparing financially!
What are the income requirements to get a mortgage loan?
When determining creditworthiness, banks take into account both real,
as well as the insurance income. Although any amount earned above the Social Security limit is accepted in some capacity, what portion of that will be
taken into account when calculating the insurance income varies from bank to bank. Each lending institution adheres to its own guidelines when it comes to this requirement. For example, some banks do not approve income that exceeds the Social Security threshold. You should be familiar with these specific terms and conditions so that you can make an informed decision about which bank best suits your needs, rather than wasting time trying out multiple options.
It is important to note that banks also accept additional sources of income. So if you have multiple streams of income, it’s important to prove them with relevant documentation for the bank to consider them. This includes any civil contracts, royalties, rents or other income you may receive; by submitting the relevant documents for all your different forms of income generation. Not only will this demonstrate a higher overall figure and make loan approval more likely – but it may even increase your chances of getting better terms overall!
If you need quick cash, using a company that offers quick loans can be tempting. However, a lot of care should be taken before getting this type of loan; don’t forget to calculate the costs and interest rates associated with the amount borrowed – these can often have an impact on your finances if not calculated correctly! Before filing a claim, it’s best to speak with an independent credit counselor to help you through the process.
Ask yourself: is taking out a loan worth it?
Finally, lenders will also consider the loan-to-value ratio (LVR) of the property being purchased. This is the ratio between the amount of money borrowed and the value of the property, such as a home. Lenders may require a higher down payment from potential borrowers with higher LVR ratios to reduce risk. In Bulgaria, some lenders have an acceptable LVR range of up to 80%.
By considering all these factors, you will be able to make sure that you are getting the best possible deal when applying for a mortgage loan in Bulgaria. It’s important to remember that lenders want to make sure borrowers can make their payments, so understanding the loan application process and what lenders are looking for is vital to success. You can secure the best possible mortgage loan in Bulgaria with proper research and preparation.
