CREDIT CONTROL

Only five percent of all applicants used a credit consultancy last year but the industry is expected to take off in the near future. Securing a mortgage loan in Bulgaria is probably a similar process to that of your own country. One moment you think you know all the ropes and are ready to select your credit plan, the next you realise you forgot to read the small print and you have to reconsider.

Applying for a mortgage loan in a foreign country involves much more than merely choosing the right bank. The devil is in the detail and nobody is better suited to explain it than a professional credit consultant. How do you know which consulting company is right for you? Your choice is more difficult given that credit consultancy is a relatively new field in Bulgaria.

Do I have to pay?

The entire process of securing a loan, from entering the consulting company's office to signing the final contract with the bank, should be free. Some companies levy a service fee – from 0.5 to one percent of the loan's total value. They may justify their charges by claiming to be more reliable or experienced than other consulting agencies. Yet all consultancies receive their commission from the bank with whom you sign the contract. So if an agency charges you it does not imply a better service.

How independent is your credit consultant?

Once you have decided whether to opt for a free or paid service, you need to gauge if your consulting agency is sufficiently independent. Surprisingly, in this case "independent" means that the agency should work with as many banks as possible. In Bulgaria, a credit consulting company often collaborates with a small number of banks, narrowing your choice. If so, the best hope is for a company that works in a network with no fewer than10 financial institutions, thereby offering a range of between 60-70 credit products.

What can your credit agency do for you?

You need not know all the stages of the application yourself. Your consultant is obliged to describe them to you and convince you of their competence to cover every aspect of the process. You may encounter a credit consultant who merely offers a recommendation. This is an inadequate service. A credit consultant must be willing to assist you with everything: selecting the suitable credit product, preparing and submitting relevant documentation to the bank, monitoring the assessment process and signing the contract. If after the loan is approved the client wishes to modify certain conditions, the consultant should also assist you with this.

Can I choose my credit plan without assistance?

Probably, but why take the responsibility when a credit consultant's services will cost you nothing and ensure you make an informed decision? If you insist on going it alone, you need to consider, among other factors, the following: the bank's reputation, the terms of tenure, the loan-to-value rate available, the current interest rate and predictions for forthcoming years, requirements for property insurance, terms of approval of the loan and repayment options, early-repayment charges and penalty interest rates in case of overdue payment, in addition to other factors. Bear in mind that you'll be incurring other costs: the preliminary examination and assessment charge, the property survey charge and the one-off management commission as well as the commitment and repayment commission are also crucial factors. Cumulatively, they will constitute a considerable sum. Do you still think you can cope alone?

Does your mortgage broker speak your language?

Banks' mortgage loan conditions differentiate between Bulgarians and foreigners. This does not necessarily imply higher credit costs for expatriates, although this is often the case. The big difference is in the documentation required. The Bulgarian banking system, although modern and competitive, still lacks effective and fast mechanisms for working with foreign companies and private entities. The banks' mortgage assessors must review and verify all documentation that proves your income – a time-consuming, cumbersome and almost impossible process. If you are a UK citizen you have no problem – all you need do is complete the P-60 form and submit it together with your credit history documentation. Most banks, however, have the following stipulation for other nationals: "Applicants who are not citizens of the United Kingdom are expected to provide documentation corresponding to that listed for UK citizens." This is where your mortgage broker steps in. They should be familiar with every piece of paper you need to get your loan approved. You can only ensure your agent is up to the task by asking them if they have ever worked with fellow nationals. If not, it's your call whether to entrust them with acquiring all the necessary documents. Of course, you can always seek another credit consulting agency.

Even if you trust your mortgage agent completely and you are sure they have given you all the information, the final decision is in your hands. Ask yourself:

• What is the period in which you plan to cover your loan?
• What is the minimum monthly installment you can afford? What is the maximum?
• Will your income fluctuate? What is the possibility for it to increase?
• Is it important for you to cover your loan earlier than the date stated in the contract? Are you ready to pay all charges?

When you have the answers, you can select the general mortgage product. It is easier and safer to leave your credit consultant to deal with the "small print".