Lending of home improvements

Since 2008, Habitat Bulgaria has been working in partnership with the Dutch Association Dutch Guarantees for Housing Foundation (DIGH) and Microfund AD – a renowned Bulgarian microfinance institution. A joint housing fund of EUR 1 000 000 has been capitalized to provide access to financial solutions for low-income families. The target group of the project are families with an income between 20-100% of the average salary, calculated individually for each area in which the partnership operates.

Loans are used solely for residential improvements, primarily focusing on improving the energy efficiency of beneficiaries such as:

• roof and / or waterproofing repairs;
• external insulation;
• repair and replacement of joinery;
• water and sanitation;
• change of heating system.

The first loans under the joint program were disbursed in September 2008. Since the beginning of the project, over 1,000 families have been serviced all over the country, including those part of the program “Energy renovation of Bulgarian homes” initiated by MRDPW. The total amount of the loans is approximately EUR 1,000,000.

The majority of the loans were for energy efficiency (approximately 70%) as the program aims to reduce the energy costs of families by 20-50%. The majority of beneficiaries are low-income families who do not have access to the banking system or do not meet its loan criteria. The program is the only possible way to obtain a loan as the terms of the loan are much better than the average for the country for the specific target group. The flexible pricing of the product is very well accepted by the beneficiaries.

Family selection criteria are tailored to the economic development of each region in the country and are not unified, making it more competitive than traditional banking models. The multiple monitoring visits and independent external evaluations indicate that Habitat Bulgaria and Microfund have developed a flexible and competitive product that is well accepted by the target group. The most represented cities in the country are Vratsa, Razgrad, Sliven and Silistra.

From 2015 DIGH has decided to withdraw its funding at a regional level, which effectively terminates the 2008 joint housing fund. However, the financial product continues to be delivered thanks to the overall financing and dedication of Microfund AD.