The bill amending the Consumer Credit Act was moved in the parliament by MP Yordan Tsonev and a group of lawmakers. The amendments propose the following changes: the creditor won’t have any right to charge the mortgagor for early payment of the loan after the end of the first year. Before the expiry of the first year of the mortgage loan, the financial institution is entitled to a penalty fee, but the latter could be no higher than 1 % of the amount of money paid earlier.
The Coalition for Bulgaria MP, Rumen Getchev explained the aim of the law is to balance the interests of the consumers and the creditors. The changes also prohibit banks from charging some types of fees and commissions considered to be the essence of its business. In addition the fee or commission could only be charged once for one and the same operation. The fees and commissions to be charged should be explicitly written and explained in the loan agreement.
The changes foresee the abolition of the existing “reference interest rate” as part of the definition “adjustable interest rate” on the loan. In the future the banks should determine the adjustable interest rate by using market indexes such as LIBOR, EUROBOR, SOFIBOR or a combination of the three, and/or indicators published by the Bulgarian National Bank and the National Statistical Institute.