Buying a home is a big step and for most people it is associated with mortgage loan. One of the most important questions right from the start is: How much money do we need to have in advance? The answer is related to the deductible and additional transaction costs.

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What is a mortgage deductible?

Self-participation is the amount that the buyer must provide with their own funds when purchasing a property. Banks rarely grant a mortgage for 100% of the value of the home, so an initial payment is required from the client.

Typically, banks finance between 70% and 85%, which means self-participation from:

10% to 30% of the property value

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What amount is required for deductible?

Example calculations:

• Property for 150,000 BGN → deductible 20% = 30,000 BGN.
• Property for 200,000 BGN → deductible 20% = 40,000 BGN.
• Property for 300,000 BGN → deductible 20% = 60,000 BGN.

Important: the bank does not always calculate the loan based on the sales price, but on the valuation of the property by a licensed appraiser. If the estimate is lower than the actual price, the difference is paid by the buyer.

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Additional costs for a mortgage loan

In addition to the deductible, you must also provide funds for:

• notary fees
• local property acquisition tax (usually 2–3%)
• registration fee in the Property Register
• property valuation fee
• bank fees (withdrawal, processing, servicing)
• mandatory insurances: property and often life
• Broker commission (if you buy through an agency and if there is a buyer's commission)

Total additional costs are often between 5% and 10% of the property value.

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How much money should we have in total?

The best rule is:

deductible + another 5%–10% additional costs

Example:
Property for 200,000 BGN.
Deductible 20% = 40,000 BGN.
Additional costs = 10,000–15,000 BGN.

Total money needed: about 50,000–55,000 BGN.

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What do banks look for in a mortgage loan?

When applying, banks evaluate:

• income and employment contract
• credit history (do you have any arrears)
• age and loan term – the loan term is determined according to the applicant's age
• job stability – it is recommended to have at least 3 months after the end of the probationary period
• income/contribution ratio (monthly contribution should usually not exceed 30–50% of income)

The higher your deductible, the better terms you can get (lower interest rate and easier approval).

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Fixed or floating interest rate?

• Fixed interest rate – security and predictable monthly payment for a certain period.
• Floating interest rate – may change depending on the market.

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Conclusion

The deductible for a mortgage loan is usually between 10% and 30%, but along with the additional fees and costs, it is good to have at least 20%–30% of the property value, so that the transaction goes smoothly and without unpleasant surprises.

If you are planning to buy a home and are wondering exactly how much money will you need, contact us for a free consultation and we will help you calculate the best mortgage loan option according to your budget.