How to make a mortgage change?
The change of mortgage has the objective of improving the conditions of the contract signed specifically. Carry out the transfer of the mortgage between entities is a fairly unknown procedure, since a few borrowers think that they have the possibility of saying goodbye to their bank and passing their mortgage loan with another.
In which cases does mortgage subrogation apply?
The mortgage change allows you to change any of the debt titles (either the debtor or the creditor), or change the mortgaged asset. This last option is much less common and would be used to maintain the conditions of the loan, if you change house. In these cases, banks already have a financial product for this situation: the bridge mortgage.
Change the owner’s mortgage
Debtor subrogation can be used when buying a home. In this case, the buyer replaces the seller in the mortgage loan before the same bank, so that he becomes the new owner of the mortgage.
Changing the mortgage holder benefits both the home seller and the buyer. The former will be able to get rid of the debt without having to pay any early cancellation expenses, it will also save the mortgage registration cancellation.
The buyer, for his part, agrees to a loan in better conditions, if the mortgage was signed a long time ago. It also implies lower incorporation costs. A change of debtor is cheaper than opening a new mortgage.
For all this, one of the key steps before buying a home is to ask about the mortgage.
Change bank mortgage
This is the best-known modality. Most of the mortgage subrogation’s that are carried out are with a change of creditor, seeking to improve the conditions of the mortgage. You do not need the permission of the entity to carry out the procedure. The only requirement that must be met before starting the process is to have already paid at least three years of credit.
In a mortgage subrogation, not all conditions can be subject to negotiation. The following aspects can be negotiated:
- Interest rate. You can negotiate the interest rate. The new Mortgage Law encourages the change from variable interest mortgages to fixed interest mortgages.
- Repayment term. If you need to extend the term of the mortgage, you can do it.
- Mortgage fees. Most banks apply the maximum commissions allowed by the early amortization or novation Law. You can negotiate them.
- Products linked to the mortgage. The new mortgage law puts a limit on the relationship. Now products associated with the mortgage, such as life insurance, home insurance or even pension plans cannot be mandatory, and the entity is obliged to submit an offer without them.
- Abusive clauses. Of course, by changing banks you can eliminate floor clauses and any other abusive conditions in your mortgage.
How much does a surrogacy cost
Making a mortgage change to another bank is not free. The entities discourage this type of situation through the nucleus of commissions. The Law is in charge of limiting the commission for mortgage subrogation. Other additional expenses include the appraisal of the home, administrative expenses, notary’s office, property registry, etc., derived from the processing of the process.
Commission for mortgage subrogation
By law the amount of this commission is regulated. Being established during the first 5 years with a maximum ceiling of 0.5% of the outstanding capital and, as of the sixth year, the ceiling is limited to 0.25%,
When the entity stops making money, it can penalize and it does. These are the cases of early cancellation or mortgage subrogation. This risk commission is not regulated by law and ranges between 0.5% and 5% of the outstanding capital of the mortgage.
The total changes in the bank’s mortgage can amount to between 2,000 and 3,000 euros in media, although the final figure will depend on the capital to be subrogated, the cost of the home and the Autonomous Community in which it is located.
Taxes for mortgage subrogation
Mortgage subrogation does not involve the payment of taxes. In fact, this is one of its advantages over a mortgage. The procedure does not imply VAT or ITP, since you are not acquiring any goods.
Steps to change the bank mortgage
Look for alternatives
Look for a new mortgage with better conditions. Visit the entities in person. The terms of this deal are often not openly advertised.
Wait for the binding offer
When the entity has been chosen, submit a subrogation request. If they accept it, the new bank will have a period of seven days to show what the conditions of the new loan would be like. Next, you will have a period that the entity will give you to decide if the new offer is appropriate. Use a mortgage simulator to compare savings against interest rates.
Don’t forget to ask about the conditions of the associated products either, because they can make a difference.
Wait for the counter offer
At this point, the owner entity will already know that you plan to change the bank mortgage. The entity may submit a renewal offer that matches or improves the conditions of the new bank. This is when the old entity has the last word, since if it decides to make a counter offer, you will not be able to leave the current bank and, therefore, the subrogation attempt would end here.
Once the 30-day period has passed, you will already have a mortgage with better conditions, whether or not you have changed banks.
The main reason to manage a mortgage change is the possibility of having a lower monthly payment. Which means long-term savings. Therefore, you must analyze the costs in detail, before making a decision.
If you are thinking of making a mortgage change, at Sky Marketing we can help you. Contact us and our experts will give you all the advice you need to decide on the mortgage change.