What are the differences compared to the bank mortgage and business loans
Banks can always find a reason to reject your mortgage or business loan, even if there isn’t one. Our mission is to find a way to finance you, not one to reject you. Let’s look at the main reasons why a bank might reject your mortgage or business loan and how Lenno can help you in the same situations.
Bad credit history
The credit history of each individual or business entity in Bulgaria is administered by the Central Credit Register, operated by the Bulgarian National Bank. By being registered as an irregular payer, it becomes extremely difficult for you to receive a loan in the next five years, even if you repay your debt. Unlike most banks, Lenno takes into account your credit history only in relation to the Consumer real estate loans act.
If 4 years ago you lost your job and as a result you delayed several monthly installments on your consumer loan or credit card, then your bank most likely still classifies you as a risky or even irregular payer, even if you have already repaid your debt.
- The bank will probably decline your mortgage or business loan application under the pretext of bad credit history.
- In the same situation you can be approved by Lenno and that is why more and more clients turn to us.
Lack of income or turnover
Doing business in Bulgaria is not easy. Despite that, there are more than 1.5 mln registered companies most of which don’t have enough history, income or turnover to receive financing from a bank. For Lenno, these are not reasons to reject your loan, on the contrary – we believe in entrepreneurship.
You manage a small business with low turnover and low profit margin. Or you just incorporated your company.
- The bank will probably decline your business loan on the pretext of lack of company history and/or low turnover.
- Lenno will approve your loan regardless of whether you are a newly established company, with lack of turnover, or incurring a loss.
It is important to understand
As the Consumer real estate loans act enters into force, individuals who wish to receive a loan under this Act must prove sufficient income. Contact us for more information.
Excessive indebtedness is becoming more common in Bulgaria. A lot of people already have a mortgage and a consumer loan, few credit cards and sometimes are even tempted to get a payday loan. Almost always it is better to refinance all small loans and credit cards by consolidating your debt into one secured loan. Banks can also cooperate in such instances, unless you have delayed payments on your current loans. In any case, Lenno is here to help you.
You have a consumer loan with BGN 12,000 remaining principal. Two credit cards for BGN 1,500 each. Three payday loans for the total of BGN 2,500. This way you have to repay 6 different monthly installments, which you often delay – sometimes due to financial difficulties and sometimes due to negligence.
- The bank will probably decline your loan on the pretext of excessive indebtedness and/or bad credit history.
- Lenno will refinance all your liabilities, as per our loan agreement. We have lent to a client with 27 different loans.
Foreclosures on enforcement cases and public sales
The global financial crisis was felt in Bulgaria years later. Although, it is long forgotten in the west, in Bulgaria there are still a lot of people who experience financial difficulties. If there are any enforcement cases against you or if your assets are subject to public sale, do not lose hope – a lot of people have been in a similar situation. Unfortunately, the banks do not have a solution for clients in your situation. Contact us to hear our solution.
А foreclosure on your property has been declared by the utility company ABC or another creditor for the amount of BGN 4,000. You don’t have this much at your disposal, but you want to get a BGN 15,000 mortgage loan and use it to repay your enforcement case obligations.
- The bank won’t approve your loan application before the foreclosure on the property is removed, which can only be done after repaying the debt amounting to BGN 4,000 on the pretext that the collateral is encumbered and the bank's mortgage won’t be first rank.
- Lenno will ask for a certificate from Private Enforcement Agent (PEA) for the current debt from the enforcement case. After which: we approve the loan, we become second rank mortgage, we transfer BGN 4,000 to the PEA, according to the loan agreement, we take charge of the communication with the PEA until the foreclosure has been discharged, transfer you the remaining BGN 11,000. We have granted a loan to a client with 7 foreclosures on 7 different enforcement cases, i.e. our mortgage was 8th in rank.
Obligations to the state
As you may know, you don’t have the right to dispose of your property, including that you could not enter into mortgage agreements if you have outstanding debt to the government – NRA, municipalities or other. Even if the purpose of the loan is to repay those obligations, you will find yourself in a vicious circle from which until recently there was no way out.
You intend to get a BGN 50,000 loan, collateralised by real estate. Unfortunately, you owe the NRA BGN 5,000 related to your business. You are advised by your bank to repay your debt before you continue with your loan application.
- The bank won’t approve your loan request, before you provide a Certificate that you no longer have outstanding obligations. Even more frustrating is the fact that even if you repay your debt, that doesn’t guarantee your loan request will be approved.
- With us the situation is different. Lenno will lend you portion of the loan in advance. In your case - BGN 5,000, which you can use to repay your debt. After which we make a mortgage entry and you receive the remaining BGN 45,000.
Age over 65 years
Although, discrimination should not be tolerated, most banks won’t approve your mortgage or business loan request if by the end of the repayment plan you are above the age of 65. We understand that this is related to the normal retirement age, however at Lenno we don’t believe in this restriction.
You are 50-years-old. You wish to get a mortgage loan for the amount of BGN 70,000. In order to pay the minimum monthly installment, you chose the maximum repayment period for your loan which a chosen bank offers – 30 years.
- The bank won’t approve your loan request with 30 years repayment period. They will draft a 15 year repayment plan (after that you will be 65-years-old), which will drastically increase your monthly installment.
- For Lenno your age does not matter. We have lent a 10-year loan to an 81-year-old person who 2 years later, still in good health, made an early repayment.
Let’s look at a few more of Lenno’s advantages, compared to the banks.
Fast approval and execution
Most creditors are slow. They don’t care about your urgent needs. You have to constantly push them to do their job. It does not need to be that way. This is how we lend:
- We will approve your loan within 1 hour after you send all documents for the collateral and the borrower’s personal information.
- We will lend you up to €5,000 upfront, which you could use to repay your overdue tax debt, to obtain the necessary documents or for other urgent needs.
- After the mortgage entry, banks ask for an Encumbrance certificate, which is issued by the Registry Agency within 3 business days. We transfer the remaining amount 30 minutes after the mortgage entry.
Today is Monday and you have all the necessary documents to sign the mortgage deal in the presence of a notary. In the last couple of weeks you have been negotiating with your bank and you have a loan approval. It is a matter of life or death that you receive the loan on Friday.
- If you sign all bank documents on Tuesday, the mortgage will most likely be registered on Wednesday or Thursday, which means that you will get the Encumbrance certificate next Monday the earliest, after which the bank will credit your account within 3 days.
- Lenno can approve your loan request as early as Monday. Despite the tight deadlines, we can prepare all documents within the same day and we can sign the mortgage deal in the presence of a notary on Tuesday. If the mortgage gets registered on Wednesday or Thursday before 15:00, we will make a RINGS transfer to your account and you will receive the amount on the same day – a day or two before your deadline.
Interest type and APR
Unlike bank interest rates, which usually fluctuate with a benchmark interest rate, and which often vary according to central bank policies, Lenno's interest rates are fixed for the entire period. This eliminates future surprises caused by changes in the monthly payment, which most often happen during tough economic times.
Due to the fact that we undertake a much higher risk, our interest rates are higher compared to bank’s interest rates. Despite that, we have developed the Promotional Program “Effective appreciation” for correct business clients. This way our loyal clients pay as much as they would for a bank loan.
- Interest type – fixed.
- Installment type – annuity or specifically agreed.
- Grace period for the principal – up to 3 years.
- Appreciation after the refund of 77% of the interest paid, according to the Promotional Program “Effective appreciation” – 4.83% (At an interest rate of 21%, under the business loan agreement).
Banks give mortgage and home equity loans with a maximum term of 30-35 years, unless you fall under the age restriction mentioned above. For business loans, however, banks rarely offer repayment periods longer than 7-10 years, which increases the monthly installments several times.