Stress test: What happens if you lose your job?

Nobody buys an apartment thinking "what if I get fired?" You think about a fresh start, renovation, furniture. Not about scenarios where your income disappears.

But the mortgage doesn't care about your plans. It wants EUR 1,000 a month — whether you have a job, whether you're on sick leave, whether you're on maternity. And if you didn't run a stress test before signing, you may find out too late that your buffer is zero.

What is a mortgage stress test?

A stress test is a simulation: what happens to your finances if something goes wrong? Job loss, salary cut, maternity leave, rising interest rates.

The gold standard is the Canadian model. Since 2012, the Canadian financial regulator (OSFI) has required banks to qualify borrowers not at the contract interest rate, but at a higher one:

Qualifying rate = max(contract rate + 2%, 5.25%)

The floor of 5.25% has not changed since June 1, 2021. Since January 1, 2018, the rule applies to all uninsured mortgages, not just insured ones.

The idea is simple: if you can pay at 5.25% interest, you'll manage even if rates spike.

Bulgaria has no stress test

Things are different in Bulgaria. The BNB introduced macroprudential measures (October 2024), but they check your current ability to pay, not your future one:

The effect is visible — the share of loans with DSTI over 50% fell from 24.6% (Q3 2024) to 3.1% (Q4 2024). But there's no requirement to qualify at a higher rate. If you pay 2.69% today, the bank doesn't test you for what happens at 5%.

And most loans in Bulgaria after joining the Eurozone have variable rates (EURIBOR-based). A jump from 2.7% to 5% on a EUR 200,000 loan over 25 years pushes the payment from ~EUR 920 to ~EUR 1,170 — EUR 250 more per month.

That's why the stress test is your responsibility.

What happens if you lose your job?

In Bulgaria, the unemployment benefit is 60% of your average daily insurance income for the last 24 months. But the devil is in the details:

The duration depends on your insurance record:

Warning: If you quit voluntarily or by mutual agreement on your initiative, you receive the minimum benefit (EUR 9.21/day, ~EUR 276/month) for only 4 months. That's not the same as being made redundant.

To be eligible for benefits, you need 12 months of insurance contributions in the last 18 months and to register at the Labor Bureau within 7 working days of dismissal.

In case of redundancy, you also have the right to compensation from the employer: minimum 1 month of gross salary in mass dismissals, or minimum 4 months of gross when terminating by mutual agreement on the employer's initiative.

The survival formula

The stress test boils down to one simple equation:

Months of survival = Savings ÷ Monthly deficit

If you have EUR 15,000 in savings and your monthly deficit (needs minus income) is EUR 500, you can hold out 30 months. If the deficit is EUR 1,000 — only 15.

Four scenarios for a couple with a mortgage

Let's take a realistic example: a couple with combined income EUR 3,500 (EUR 2,000 + EUR 1,500), mortgage payment EUR 1,000/month, living expenses EUR 800/month. Total needs: EUR 1,800/month.

Scenario 1 — the higher salary disappears:

• Income: EUR 1,500 (partner) + EUR 1,200 (60% benefit of 2,000) = EUR 2,700
• Surplus: EUR 900. Manageable.

Scenario 2 — the lower salary disappears:

• Income: EUR 2,000 + EUR 900 (60% benefit of 1,500) = EUR 2,900
• Surplus: EUR 1,100. Manageable.

Scenario 3 — both with 30% pay cut:

• Income: EUR 1,400 + EUR 1,050 = EUR 2,450
• Surplus: EUR 650. Tight, but bearable.

Scenario 4 — maternity, second year:

• Income: EUR 2,000 + EUR 460 = EUR 2,460
• Surplus: EUR 660. Similar to scenario 3.

This couple can handle each individual scenario. But what if the interest rate jumps at the same time as an income drop? Or if they have no savings? Then even EUR 250 extra a month (from a rate hike) can flip the surplus into a deficit.

Maternity — the hidden stress scenario

Many couples don't think of it as a financial risk, but the numbers speak:

• First year (410 days): 90% of salary. Relatively painless.
• Second year (until the child turns 2): fixed EUR 460/month (BGN 900). This is the new amount for 2026 — increased from BGN 780.

If the mother was earning EUR 1,500, the drop from EUR 1,350 (90%) to EUR 460 is a shock. And it lasts for months on end.

There's good news too: if the mother returns to work before the child turns 2, she receives 75% of the benefit (instead of 50%, a change for 2026). But not every job allows a quick return.

Include maternity in the stress test. Especially if you're planning a child in the early years of the mortgage.

What to do before you buy

1. Calculate your monthly needs — mortgage + living expenses + insurance + taxes.
2. Simulate income loss — what's your income from benefits alone? Is it enough?
3. Build a reserve of 6–12 months of expenses in savings before signing.
4. Check how many months you can hold out under each scenario — the formula is simple.
5. Don't forget interest rate risk — test what happens if the rate hits 5%.

If under any realistic scenario you can hold out less than 6 months — think about whether you're buying above your means.

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Want to see the full picture for your property? Use our calculator — it runs a stress test with different scenarios and shows how many months you can hold out under income loss.