Refinancing or consolidating loans
Refinancing replaces one loan with a new, cheaper one. Consolidation combines several loans into one, so that you make a single payment.
The two terms are often confused, because consolidation is in practice refinancing several debts at once. What is usually refinanced is a mortgage, when another bank offers a lower rate. What is usually consolidated is two or three non-bank loans and one bank loan. At CREDiPORT, consolidation is done with a loan secured on property.
Of 36,056 CREDiPORT consumer loan applications from October 2023 to October 2026, 42% are to pay off old loans, the most common purpose. In 2026 half of these applications are for amounts up to €5,150.
When refinancing is worth it
When the new rate is low enough to pay back the switching costs, and the loan still has a long time to run.
Take a mortgage with a balance of €100,000 over 20 years and switching costs of about €1,100. A rate half a percentage point lower, from 2.93% to 2.43%, cuts the payment by about €25. The costs are paid back in about 4 years, and over the whole term you save about €4,800. A full percentage point lower cuts the payment by about €50, and the costs are paid back in about 2 years. If only 5 years remain, half a point barely covers the costs.
Add to the costs the compensation for early repayment of the existing loan, if it is due, and the fees for the new loan, such as mortgage registration and the notary. Banks also look at how you have paid so far, so refinancing is easier after at least a year of regular payments. The refinancing calculator does the calculation for your balance and term.
When consolidation is worth it
When you are paying two or more loans, especially non-bank ones, and the combined payment is a burden or you are already late with one. You are left with one payment and one due date. The payment usually falls because of the longer term, and the total you repay grows with it. Compensation for early repayment may be due on the existing loans, and the new lender looks at your credit history.
What would the payment be with debt consolidation?
Enter two or three of your current loans and see what the payment would be if you combined them into one.
How they differ
More questions
How many loans can I consolidate?
The law sets no limit. The limit is the amount: the new loan must cover all the old ones, and for a loan secured on property it depends on the property valuation. The more loans you have, the more certificates of the outstanding balance you need to collect.
Does consolidation damage my CCR record?
The CCR will show the new loan, and the old ones will appear as repaid. Consolidation in itself is not a bad sign. What matters is paying the new instalment on time: over time your history then improves, because there are fewer loans and no late payments.
Can I negotiate better terms myself without refinancing?
Yes. Ask your bank for a lower rate. If you bring an offer from another bank, it is more likely to agree.
Sources and legal basis
- Consumer Credit Act: the APR cap and your rights as a consumer
- Bulgarian National Bank (BNB) register of credit intermediaries (CREDiPORT is entered under No. BCI000061)
- Act on Real Estate Credit for Consumers: early repayment of a mortgage loan and compensation
- Loan application data from CREDiPORT and CreditArena, with methodology and CSV