Since 16 September 2026 the ECB's deposit facility has stood at 2.50% — the second increase this year. In Bulgaria the effect on the price of a mortgage has so far been marginal: BNB data for July 2026 puts the average rate on new housing loans at 2.43%, with an APR of 2.77%. We covered the decision and how it transmits to the Bulgarian market in a separate article.
For anyone already holding a mortgage, the question is a different one: is it worth moving the loan to another bank? In July alone, renegotiated and refinanced housing loans came to €140.8 million — routine practice rather than the exception. Whether it works in your case, though, is settled by arithmetic, not by instinct.
This guide sets out that arithmetic: what the law gives you, what you will actually pay, and how to check how many months it takes to earn the costs back.
Refinancing means a new loan — usually from a different bank — that repays the old one. The existing mortgage is discharged and a new one registered. It involves a fresh credit approval, a fresh valuation of the property and a visit to the notary.
Renegotiating means an addendum to your existing contract with the same bank. The mortgage stays where it is. No notarial deed, no registration fee, no discharge.
The distinction matters, because most of the costs below arise only in the first case. Which is why the sensible order is the opposite of the obvious one: get a written offer from another bank first, then take it to your own. The bank holding your loan has every reason to keep you — and renegotiating costs it far less than refinancing costs you.
Early repayment rights sit in the Consumer Real Estate Credit Act (ZKNIP) and cannot be contracted away to your detriment.
1. The right to repay at any time. Under Art. 41(1), a consumer may repay the obligation in full or in part at any point within the term of the contract. A clause removing that right is void (Art. 36(2)). The lender cannot refuse to accept early payment.
2. After 12 instalments — no compensation. If you have paid more than 12 monthly instalments by the time of repayment, the bank has no right to compensation or a penalty.
3. Before 12 instalments — up to 1%. Repay earlier and compensation is due only if it was agreed, and it cannot exceed 1% of the amount repaid early (Art. 41(3)). Exceptionally, a lender may claim more if it proves an actual loss above that ceiling — but that is a matter for the courts, not an automatic charge.
4. It applies to older contracts too. The Act took effect on 2 August 2016 and, under §4 of its transitional provisions, does not apply to contracts signed before that date — with the exception of Art. 41. So the right to repay without penalty after 12 instalments covers a loan taken out in 2012 as well.
5. But only for "consumers". That means natural persons acting outside their trade or professional activity. Traders, non-profit legal entities and members of the professions who bought a studio or office for their practice do not benefit from Art. 41. For them, the contract is what governs.
6. What you are entitled to receive in writing. On a request for early repayment, the lender must give you, on paper or another durable medium, the outstanding balance, the total costs for the remaining term, and the amount of any compensation due. Ask for it before you decide anything.
The Art. 41 compensation is usually zero. The cost of swapping one mortgage for another is not.
| Cost | How it is set |
|---|---|
| Early repayment compensation | 0 after 12 instalments; up to 1% of the amount repaid before that |
| Discharging the old mortgage | 0.05% of the secured amount (half the registration fee) + notarial certification of consent |
| Notarial deed for the new mortgage | Under item 8 of the notarial fees tariff — a proportional, tapering fee on the loan amount, capped at ≈ €3,068 excluding VAT |
| VAT on the notarial fee | 20% |
| Registering the new mortgage | 0.1% of the secured amount |
| New property valuation | Per the valuer's or bank's tariff |
| Assessment and approval fees | Per the new bank's tariff |
| Property insurance | A new policy, or transfer of the existing one |
One point catches many borrowers out: notarial fees and registration fees do not form part of the "total cost of credit" under §1(17) of the Act's supplementary provisions. That is why you will not find them in the APR — and why they are not refunded on early repayment. They are paid once and stay paid.
For scale: registering a contractual mortgage for €200,000 produces roughly €1,000 in notarial and state fees — €200 registration, around €671 in notarial fee, and 20% VAT on top of it. The figure is indicative (the tariff is denominated in leva and converted at the fixed rate), and the discharge of the old mortgage and the bank's own charges come on top. Verified as at September 2026.
There is one formula, and it fits on a single line:
break-even (months) = one-off costs ÷ monthly saving
An illustrative example, on an annuity basis, and not an offer. Outstanding balance €150,000, remaining term 20 years:
| Rate | Monthly instalment |
|---|---|
| 3.20% | ≈ €847 |
| 2.60% | ≈ €802 |
That is a saving of roughly €45 a month. If the one-off costs of refinancing came to, say, €1,200, they are recovered in about 27 months — after which the saving is clear. With 20 years left, that is an easy decision. With three years left, it is not.
Two caveats that move the answer more than they look:
Extending the term is not a saving. An instalment that falls only because the term went from 15 years to 25 looks like a gain each month and is a loss in total interest paid. Compare like for like, at the same remaining term.
Late in the schedule there is little interest left to save. On an annuity, the early years are mostly interest and the final years mostly principal. The closer you are to the end, the less there is to recover, whatever the difference in rate.
Refinancing is new lending, not a continuation of the old loan. So the BNB's credit standard requirements, in force since 1 October 2024, apply — and they apply expressly both to new lending and to renegotiation:
Banks have limited room to deviate: loans approved outside those parameters in the current quarter cannot exceed 5% of the gross volume of new and renegotiated lending in the previous quarter. In practice, the exception is not made for everyone.
Three practical consequences follow. Your income is documented afresh — if your employment status has changed since 2021, that is a conversation to have. The property is valued afresh — and if it has appreciated, LTV works in your favour. And if you are servicing a consumer loan or a lease, DSTI is calculated on all those payments, not only the mortgage.
Beyond the headline rate, three things decide what you will actually pay:
How the floating component is defined. What the reference rate is tied to, who sets it, and how changes are announced. Two offers with identical opening rates diverge precisely here.
How long the fixed period runs, and what follows it. If the fix is for two years, the number that matters is the rate from year three.
The full list of fees. The APR excludes notarial and registration fees. Add them up separately — that is the figure that goes into the break-even calculation.
For a rough sense of the instalment at different rates, use our mortgage calculator. The wider context on applying is in our guide Mortgage loans in Bulgaria.
For clients with a live mortgage we run the numbers before the conversation with the bank, not after it: remaining term, outstanding principal, the monthly saving at a realistic new rate, and a complete list of the one-off costs. If the break-even comes out longer than the time left on the loan, we say so plainly. Where a buyer's fixed period expires within the next eighteen months, we raise it before the transaction rather than when the letter from the bank arrives.
After twelve instalments the law gives you the right to repay your mortgage early with no compensation — and that holds even for contracts predating 2016. The costs, however, are not zero: one mortgage is discharged and another registered, and notarial and registration fees sit outside the APR and are never refunded. Refinancing counts as new lending, so 85% LTV, 50% DSTI and a 30-year maximum all apply again. The decision comes down to one simple fraction: one-off costs over monthly saving.
If you hold a mortgage and would like to see how this works out on your own numbers, call us or come into the office. We will go through the contract and do the arithmetic with you.
BNB data (interest rate statistics for July 2026, published 27 August 2026) and ECB data, verified as at September 2026. Rates and costs are indicative and subject to change. The illustrative instalments are not an offer. This material is for information and does not replace legal or financial advice on a specific contract.
