Suzanne
08-04-08, 04:55 PM
Quite a few Bulgarians who have used mortgage credits to buy a home are now faced with new challenges. They have to mind the changes implemented by banks with raising interest on credits.
The analysis of Credit Center, the largest independent credit consultancy in Bulgaria, indicates that more than 70 per cent of credit users will be affected by the change. The growth of monthly installments will be highest for bank customers who have been paying credits back for years and have already seen interests rise on several occasions. The difference between contracted interest and the current one can sometimes exceed 2% with the highest growth registered in credits in Bulgarian leva. Raising credit is the policy of banks. People however should not watch impassively what is happening to their credit, says Tihomir Toshev, CEO of Credit Center. Bulgarians should learn now to manage their money and in the case of mortgage credits there are two options, he explains. It is renegotiating the credit or refinancing it. In both cases however it will be optimized and the customer will not be affected by rising interest levels.
“Only 15% of customers, who have decided to optimize their credit, have opted for refinancing. The rest choose to renegotiate the credit in the same bank, but under more profitable terms. We expect that by end-2008 more than 25% will choose the refinancing option.”
Renegotiating a credit can achieve the following: either cutting the size of the monthly installment, or keeping its size unchanged but rather changing the credit’s maturity.
“You are aware that incomes in Bulgaria were 22% up last year,” explains Tihomir Toshev. “A customer can be OK with the increased installment but he can renegotiate with the purpose of cutting the maturity of the credit by three years, let’s say.”
Refinancing a credit is a more complicated case requiring the assistance of a credit consultant. The process includes transferring the credit from one bank to another where terms are better. In such cases the customer achieves smaller monthly installments. There are also options of cutting fees for servicing the credit, or of choosing a credit that rules out an early settlement fee. The Credit Center statistics indicates that in March 2008 the average credit size was up to EUR 44,170. In large cities more credits are drawn in Euro, not in Bulgarian leva. Experts argue that the growth of credits with a 25-year maturity has been impressive. There is a rising demand for such credits because the monthly installment is smaller, thus easier to deduct from the family budget.
Written by Milka Dimitrova
Translated by Daniela Konstantinova
http://www.bnr.bg/RadioBulgaria/Emission_English/Theme_Economy/Material/mortg.htm
The analysis of Credit Center, the largest independent credit consultancy in Bulgaria, indicates that more than 70 per cent of credit users will be affected by the change. The growth of monthly installments will be highest for bank customers who have been paying credits back for years and have already seen interests rise on several occasions. The difference between contracted interest and the current one can sometimes exceed 2% with the highest growth registered in credits in Bulgarian leva. Raising credit is the policy of banks. People however should not watch impassively what is happening to their credit, says Tihomir Toshev, CEO of Credit Center. Bulgarians should learn now to manage their money and in the case of mortgage credits there are two options, he explains. It is renegotiating the credit or refinancing it. In both cases however it will be optimized and the customer will not be affected by rising interest levels.
“Only 15% of customers, who have decided to optimize their credit, have opted for refinancing. The rest choose to renegotiate the credit in the same bank, but under more profitable terms. We expect that by end-2008 more than 25% will choose the refinancing option.”
Renegotiating a credit can achieve the following: either cutting the size of the monthly installment, or keeping its size unchanged but rather changing the credit’s maturity.
“You are aware that incomes in Bulgaria were 22% up last year,” explains Tihomir Toshev. “A customer can be OK with the increased installment but he can renegotiate with the purpose of cutting the maturity of the credit by three years, let’s say.”
Refinancing a credit is a more complicated case requiring the assistance of a credit consultant. The process includes transferring the credit from one bank to another where terms are better. In such cases the customer achieves smaller monthly installments. There are also options of cutting fees for servicing the credit, or of choosing a credit that rules out an early settlement fee. The Credit Center statistics indicates that in March 2008 the average credit size was up to EUR 44,170. In large cities more credits are drawn in Euro, not in Bulgarian leva. Experts argue that the growth of credits with a 25-year maturity has been impressive. There is a rising demand for such credits because the monthly installment is smaller, thus easier to deduct from the family budget.
Written by Milka Dimitrova
Translated by Daniela Konstantinova
http://www.bnr.bg/RadioBulgaria/Emission_English/Theme_Economy/Material/mortg.htm