There are many ways to carry out mortgage procedures, this from the moment you buy a home and start managing the necessary payments to keep it in the right way. All the actions, payments and movements that you carry out with your mortgage can be classified and defined as mortgage novations.
Mortgage novations are the actions that are carried out within your mortgage such as financial changes or even a change in person to which the mortgage belongs. Which brings us to the topic we will talk about today: mortgage subrogation.
Definition of mortgage subrogation
Previously we mentioned the meaning and purpose of the mortgage novations, which can be any action or change in your mortgage contract, and among these is subrogation, which is defined as the change or replacement of the owner of the mortgage.
La mortgage subrogation itself can be divided into two types of subrogations; subjective personal surrogacy and objective real surrogacy. These two, meanwhile, mean different things: When we speak of a subjective personal surrogacy, we mean that a change of mortgage holder. In turn, an objective real surrogacy refers to the fact that a change of mortgage asset.
There are two other less common surrogacy divisions, but they are just as important to mention. They are personal subrogations that are divided into two sections.
Subrogations of the debtor:
In this type of subrogation, it is said that a change is made with the debtor. A part of the payment of the property is made taking into account specific characteristics, such as when the seller has mortgage debts. This is an old-fashioned type of surrogacy.
Creditor subrogations:
Of a more modernized nature, which talks about taking our mortgage and changing it banks. This type of subrogation helps us take our mortgage from the bank in which we have it, and change it to our bank of choice through a strict process. This is convenient since we save ourselves a lot of unnecessary payments and taxes and hassles such as having to cancel the mortgage, which is not necessary with creditor subrogation.
As well as those already mentioned, there are other types of subrogations which the creditor decides to initiate. These are the sales assumptions, in which the sale of a mortgage is made, passing it from a bank to an alternative.
How to subrogate my mortgage?
There are guides in which they explain step by step on how to carry out a mortgage subrogation correctly, such as the one carried out by the Confederation of Consumers and Users, or CECU, in which they give detailed instructions for people who intend to make bank changes or other kind of mortgage novations when it is easier, such as when the Euribor is weak or low.
Subrogation;
To make changes to mortgage conditions, it means that we are carrying out a modifying novation, and to carry it out we must go to the bank where we have our mortgage registered. When making a modifying novation, We may be referring to a change in capital, changes in the mortgage term, the interest rate we handle, financial conditions such as amortization, personal guarantees that are going to be changed, and so on.
Subrogate mortgage loans
Mortgage loans They can also undergo a subrogation if we wish, since acquiring a mortgage loan does not prevent us as clients from changing entities, but we can also take this loan and place it in another bank if we prefer it for its best interests or some other type of conditions that fit your preference.
Surrogacy process
El surrogacy process It begins when we find a bank in which they offer us improvements such as a lower interest or longer term, followed by a written proposal which must be shown and accepted. The bank must accept, subsequently it will notify the original entity that the client wishes to make a subrogation, and they will request a report of the amount that the debtor still owes, a report for which a period of seven days will be given to be delivered.
Change your mortgage multiple times
Mortgage changes are limited, you cannot go from one place to another changing banks whenever you want. This is because the offers that banks make to you are changing, and if your mortgage has been subrogated many times, their offers may decrease more and more.
It is likely that the bank that originated your mortgage will make you a counter proposal at the moment they find out that you plan to carry out a mortgage subrogation, this to match or improve the offer that the new bank has offered you and show that they are interested in you staying with that bank and not changing. In this case, it is the client's decision whether to stay with the current bank or change entity.
Tips for Successful Mortgage Subrogation
Having denoted all of the above, we now know the meaning of mortgage subrogation, We know the process to follow in case we are interested in changing the bank and the ways in which the bank can react to such a situation. But where exactly do you start? How is it done the right way? Next we will give you some useful tips to carry out the subrogation of your mortgage correctly and easily.
Where do you start?
It is not always good to make these types of changes, since this can result in a very high price since for banks, losing customers is the worst that can happen. Remember that your mortgage is yours, and you should not ask the bank for permission to take it and switch to another bank. Keep in mind that for the new bank to accept you, you must have paid at least three years of mortgage at the bank of origin.
Extra payments
Performing a mortgage subrogation is not free. Remember to make calculations in advance so that the final price does not give you a good scare, since changes of bank entity can result in high prices.
Commission for surrogacy
There is a law that prevents banks from charging some commission within mortgage subrogations, a commission which should not exceed 0,5% in the first years that the mortgage loan lasts, subsequently it should not exceed 0,25%.
Mortgage subrogations are made for economic needs or for convenience, a bank may offer us better interest rates and thus we pay less. But there are also cases in which we are only guided by the new differential that it offers us, and we do not take into account all the extra services to hire and the mandatory insurance that the bank puts us in front of.
Remember that subrogation laws are changing, so make sure you are up-to-date regarding the requirements and conditions that banks ask for to carry out this type of mortgage novation, all this to prevent the bank from surprising you with last minute rules of which you had not known and that your surrogacy intentions fade.
Variable and cheap mortgages for the month of May 2017
Below we will mention some of the Most recent variable mortgages that may be of interest to you, coming from banks that offer interesting offers and financing.
- Liberbank, together with Kutxabank, like ING Direct are the banks that offer cheap mortgages, which have an interest lower than Euribor 1%.
- Orange Mortgage, with an interest of 1,99% TIN, is only below the previous ones and they are one of the banks that offer the cheapest mortgages in the current market.
- Banco Sabadell and ActivoBank offer interest of 2.20% and 1.59% respectively. This shows an increase in the interest they previously offered.
Conclusion
La subrogation of a mortgage We can do it in different ways, depending on our preferences and financial needs. Each person decides the way in which they are going to handle their type of subrogation, as well as any other type of mortgage novation in which we are interested.
Remember that you are not alone, and that surely you are not the only one who is in a situation from which you see no way out. Always go to your bank and ask about any type of doubts you have, the employees will gladly assist you and resolve any you have about mortgage novations, interest rates and repayments.
Not only this, but it is also recommended that you constantly check on the internet the situation in which different entities are found such as Euribor, interest rates, and other statistics that can help you decide the bank with which you want to establish your mortgage loan, as well as the mortgage proposals and offers that they give to their clients and the necessary requirements to make changes and mortgage novations such as subrogation.