The fee is zero.
Switching is not.
After the twelfth instalment no compensation is due by law. The bill for switching banks with €90,000 outstanding still comes to over €1,200, and the average rate in the country has moved by 0.20 points in three and a half years.
The only line that really is zero and why that is not the news
The question people ask first is about the fee. The answer is short and in their favour. Under Article 41 of the Real Estate Credit for Consumers Act (ЗКНИП), the borrower can repay the loan in full or in part at any time, the lender has no right to refuse, and compensation is due only if the repayment happens before 12 monthly instalments have been paid from disbursement. Even then the cap is up to 1 per cent, and of the amount repaid early, not of the whole loan. After the twelfth instalment the law sets no conditions and leaves no loophole for a clause in the contract.
Three details turn this rule into a trap for half the people who quote it. The clock counts instalments, not dates: a loan with a grace period can be two years past the notary and still not have reached the twelfth instalment. The sentence “I owe no fee because my rate is variable” is true, but for a different law: it comes from Article 32 of the Consumer Credit Act (Закон за потребителския кредит), where the criterion really is the type of interest rate. For a mortgage loan the criterion is the number of instalments and nothing else. And third, the right under Article 41 is the right of a consumer, that is, a natural person acting outside their business. A property held by a company follows the contract, not the law.
So the question about the fee almost always has the same answer: zero. The expensive part is everything else, and nobody asks about that.
Two different operations
with one everyday name
“Switching banks” covers two things whose cost differs by an order of magnitude. Renegotiation happens at the same bank: the old mortgage stays, there is no new notarial deed (нотариален акт), and the cost is administrative. Refinancing is a new loan at another bank: a new mortgage, a new notarial deed, and the old mortgage has to be deleted through a separate procedure.
There is a legal reason here, not a bank’s whim. A statutory mortgage (законна ипотека) under Article 168 of the Obligations and Contracts Act (ЗЗД) is created only in favour of the person transferring the property or of a co-sharer in a division, that is, only where there is a transfer or a division. Refinancing involves neither. What remains is a contractual mortgage (договорна ипотека) under Articles 166 and 167 of the Obligations and Contracts Act, and that goes through a notary and the full notary fee. The cheap route that exists on a purchase is simply not there on refinancing.
From this follows something the bank will not tell you: an offer from another bank has value even when it is not accepted. It is the basis for a conversation at the place where almost all of the cost falls away. The mechanics of the mortgage loan itself are covered in mortgage loan step by step and are not repeated here.
Twelve hundred euros for zero interest benefit
Here is the bill, line by line, with €90,000 outstanding and a new mortgage for the same amount. The figures are our calculation based on three public tariffs as of 4 September 2026: the bank’s tariff of fees on loans to individuals in force from 1 September 2026, the Tariff of Notary Fees under the Notaries Act (Тарифа за нотариалните такси към Закона за нотариусите) and the Tariff of State Fees Collected by the Registry Agency (Тарифа за държавните такси, събирани от Агенцията по вписванията).
Valuation of the apartment €120.15. Checking and analysing the collateral €205. Preliminary review of title €50. Notary fee for the new contractual mortgage, including VAT, €541.49, the largest line on the list. Registration of the new mortgage €90. Bank fee for registration steps €20. Then deleting the old one: a fee from the old bank of between €40 and €46, notarial certification of its consent €81.22, state fee €45. Plus a certificate of encumbrances (удостоверение за тежести) by express service €15.34. In total about €1,211.
The bill grows with the size of the loan, because three of the lines are percentages: about €933 with €50,000 outstanding, about €1,441 with €120,000 and about €1,645 with €150,000. Left out of the table are the tax assessment (данъчна оценка), the cadastral scheme (кадастрална схема) and reassigning the insurance in favour of the new lender.
The number that carries the topic is the contrast: the early repayment fee is zero, and switching still costs over €1,200.
The payback point
and why it often never comes
The cost is recovered from the difference in interest, month by month. So there is a month in which the bill breaks even, and it is calculated, not felt. Our calculation with €90,000 outstanding, 20 years remaining and a cost of €1,211 gives the following: with a difference of 0.10 percentage points the switch never pays for itself before the end of the term; at 0.15 points it pays back after 133 months, that is, over eleven years; at 0.30 points after 58 months; at half a point after 34 months.
The second cut is by size. With the same half-point difference: €150,000 outstanding over 25 years pays back in 27 months, €90,000 over 20 years in 34 months, €60,000 over 15 years in 48 months, and with €40,000 and five years remaining the switch does not pay back at all. The reason is simple and has nothing to do with the interest rate: the fixed lines in the bill do not shrink along with the loan.
And third, the payback point is a point, not a result. It says when the cost has been recovered, not how much has been gained. With €90,000, 20 years and half a point, the saving over the whole term is about €4,800 against a cost of €1,211. At 0.20 points it is under €700 net over twenty years.
The difference that in Bulgaria has almost nowhere to come from
The story “switch banks and save” is imported from markets that went through a cycle from five per cent down to two. Here the material for such a story is missing. According to the interest rate statistics of the Bulgarian National Bank (БНБ), the average interest rate on newly granted housing loans was 2.43% in July 2026, with an annual percentage rate (ГПР) of 2.77% (press release of 27 August 2026). The same series gives 2.61% in January 2023, 2.57% in January 2024, 2.50% in January 2025 and 2.44% in July 2025.
So over three and a half years the whole range is 0.20 percentage points. Put that number next to the previous section: at 0.15 points the switch pays back in eleven years, and at 0.10 points it does not pay back.
The conclusion is not that refinancing is pointless. The conclusion is that when it makes sense, the sense comes from an individual mismatch, not from the market: a specific loan carrying a margin well above today’s, usually because the file was weaker in the year the loan was granted. That does not show in an advert and does not show in the instalment. It only shows when specific documents are compared.
The scale is still serious: €140.8 million of renegotiated and refinanced housing loans in July 2026 alone, about 17.5% of the month’s housing loan volume. The BNB, however, reports the two in a single line, so how many of them are a switch of bank is not known, and we will not claim it.
Four ways
for the calculation to flip
Refinancing is a new assessment, and it may not pass. The BNB’s requirements on credit standards (at most 85% loan to collateral value, at most 50% debt service to income, a term of up to 30 years) apply both when a loan is granted and when it is renegotiated. The new bank looks at the file by today’s rules, not by the rules from the year of the old loan. And the valuation and the collateral check, over €325 in total, are paid up front and are not refunded if the loan is refused. The mechanics of the three caps are in the BNB tightened lending.
The Article 41 clock resets. After the switch the loan is a new contract with a new disbursement, and the twelve instalments start again. Someone who stayed five years at the old bank and was completely free to leave goes back to year one. With a loan that is about to be repaid from the sale of the property, switching shortly before the deal creates a fee that would otherwise not exist (see selling with a mortgage).
A second encumbrance blocks the new mortgage. The new bank wants first rank. The old mortgage is lifted with the consent of the old lender, which comes after repayment, which comes from the new disbursement, which does not start without a clean property record. The circle is closed with an agreed sequence between two banks that have no contractual relationship with each other.
The lower instalment comes from a longer term. With €90,000, extending from 20 to 25 years at the same 2.55% rate adds about €6,700 in interest. It gets told as “we saved €49 a month”.
An offer is compared by a number that is not the rate
Two representative examples, published by the banks themselves as of 4 September 2026, show how misleading a comparison by advertised rate is. The first: €50,000 over 240 months at a rate of 2.60% and an APR of 2.86%. The second: €112,000 over 360 months at a rate of 2.55% and an APR of 2.72%. The difference between the two rates is 0.05 points. The difference between the two APRs is 0.14 points, almost three times larger. The first example also includes a bank package fee of €3.30 a month, that is, €792 over twenty years, which is not interest.
And the APR is not the end of it. The first bank states explicitly that the compulsory property insurance is not included in the APR. Separately, the advertised rate there is conditional: it applies when a salary is paid into the account and a paid bank plan is used. A condition like that does not expire on a date but when life breaks it, and no reminder comes.
The price of certainty is published too. The same loan with a fixed rate for the first three years gives a total amount payable of €184,894.59, against €160,057.53 with the variable rate. A difference of €24,837 for knowing the rate for three years out of thirty. It is not a mistake but a choice between known and cheap.
Two supports exist and go unused: under Article 25(3) of the Real Estate Credit for Consumers Act, the methodology for the reference interest rate is part of the contract and cannot be changed unilaterally, and under Article 9(3) the consumer has a 14-day reflection period on the draft contract.
One tick box
worth three thousand euros
The operation that actually gets done in Bulgaria is not switching banks but partial early repayment. It needs no new mortgage, no deletion and no notary. And that is exactly where the most expensive decision in the whole topic is hidden.
With €90,000 outstanding, a 2.55% rate, 20 years remaining and an instalment of €479.11, paying in €10,000 early leads to a choice between two options. Reduced instalment: the instalment drops to €425.87, the term stays at 240 months, and the interest saved is €2,776. Shortened term: the instalment stays at €479.11, the term drops to 207 months, the interest saved is €6,075, and the loan ends 33 months earlier. Our calculation.
The difference between the two is €3,299, almost three times the whole bill for switching banks. The money paid in is the same. What differs is one tick box on one application form, ticked once and valid for the entire remaining life of the loan.
Which option is right depends on income we cannot see. With unstable earnings, the lower compulsory instalment is real protection, not a mistake. Here we say only this: the choice exists, it is worth thousands of euros, and it is usually made by someone who does not know they are choosing.
Frequently asked questions
Is a fee due for early repayment of a mortgage loan?
It depends on the number of instalments paid, not on the type of interest rate and not on the time elapsed. Under Article 41 of the Real Estate Credit for Consumers Act, compensation is due only when the loan is repaid before twelve monthly instalments have been paid from its disbursement, and then it is up to one per cent of the amount repaid early. After the twelfth instalment no compensation is due and the law provides for no exceptions. The right belongs to a natural person as a consumer, so for a company loan the contract applies. Note: the rule “no fee is due with a variable rate” comes from a different law and applies to consumer loans, not to mortgage loans.
How much does switching banks cost when refinancing?
With €90,000 outstanding the bill comes to about €1,211 by our calculation as of 4 September 2026, based on three public tariffs. The largest line is the notary fee for the new contractual mortgage, about €541 including VAT, followed by the collateral check, the property valuation, the registration of the new mortgage and the deletion of the old one. The cost grows with the size of the loan, because some of the lines are percentages: about €933 with €50,000 outstanding and about €1,645 with €150,000. Renegotiating at the same bank is incomparably cheaper, because no new mortgage is created.
What interest rate difference makes refinancing worthwhile?
With a typical €90,000 outstanding and twenty years remaining, a difference of 0.10 percentage points does not cover the cost before the end of the term, and 0.15 points covers it only after about eleven years. At half a point the payback point comes after about 34 months. A small balance is more dangerous than a small difference: with €40,000 and five years remaining, even half a point does not pay back, because the fixed fees do not shrink along with the loan. For reference, according to the BNB interest rate statistics the average rate on new housing loans was 2.43% in July 2026, and the whole range over the last three and a half years is 0.20 points.
Which partial repayment option saves more, a reduced instalment or a shortened term?
The shortened term saves significantly more interest, but the compulsory monthly instalment stays the same. With €90,000 outstanding, a 2.55% rate and twenty years remaining, paying in €10,000 saves about €2,776 in interest with a reduced instalment and about €6,075 with a shortened term, so the difference is about €3,299, and the loan ends 33 months earlier. This is our calculation and illustrates the method; it is not an offer. Which option is right depends on how stable the income is: with variable earnings, the lower compulsory instalment is protection. What matters is that there is a choice, it is made once, and it affects the entire remaining life of the loan.
Look at one line.
The number of instalments.
Open your loan’s repayment schedule and count the instalments paid. If there are twelve or more, no compensation for early repayment is due, and no clause can bring it back. Then look at the second line: how much is outstanding and how many years it has left. These two numbers settle the topic before the interest rate even enters the conversation.
Send us the repayment schedule and the offer you are considering, without the names on them if you prefer. We send back the calculation for your specific case: what switching costs with your balance, what interest rate difference is needed to recover the cost, and after how many months it breaks even. If the answer is “never”, you will hear it from us, with the numbers underneath.
Information material as of 4 September 2026; it is not financial advice and does not recommend a bank. Amounts are in euro at the fixed rate of 1 EUR = 1.95583 BGN. Tariffs change, and every loan is assessed under its own contract.
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