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When and if you want to subrogate the mortgage

Posted by Michel B. on 22/10/2019

Subrogate the mortgage is to change the loan from one bank to another in order to improve the conditions of the same. After the approval of the Real Estate Credit Law of June 2019, the subrogation has no cost to the client, as long as it is done after the first three years of mortgage. If done before, the cost is 0.15%.

Any citizen can change their mortgage from one bank to another. However, there are cases in which it may be more interesting than in others. The purpose of the subrogation is to improve the conditions of the loan, either to pay less fee or change from a fixed rate to a variable rate.

If you signed your loan before January 1, 2013

Citizens who signed their loan before January 1, 2013 benefit from rent deductions for this home. In these cases, you may not be interested in changing the bank, as you would lose this bonus.

If you signed the mortgage between 2013 and 2017

All those citizens who signed their loan from 2013 until 2017 can study the mortgage subrogation option. In those years, the average types of loans were between 3% and 4%. Now the average of the rates is below 3%. Even in some months it has been around 2.5%, so it is easy to improve the conditions of the loan compared to those that were a few years ago.

Are you interested in switching to a fixed rate?

By type of mortgage, the change from variable to fixed can be a good option for all those who are paying a differential higher than 2.5%. In the case of a variable mortgage, the differential that is greater than 1% can be improved. Currently, most entities offer better conditions in their interest rates.

If you are thinking about doing a subrogation, the first thing to do is compare the market. The more information you have about the type of loans currently available, the easier it will be to get better conditions.

What is the process to subrogate the mortgage?

When subrogating the mortgage we are faced with two possibilities: subrogation of debtor and creditor. The subrogation of the creditor consists in changing the mortgage from one bank to another. In the case of debtor subrogation the change is made in the holder or holders of the loan.

When it comes to any subrogation, the most important thing is that the mortgaged person has no outstanding debt with his bank and the monthly payments are up to date.

In the case of a subrogation of the creditor, the mortgaged party should contact one or more financial entities to analyze their financial situation and give them an offer for their mortgage. In the case of going to a financial intermediary such as this time is reduced since it is iAhorro who contacts all its entities to offer the best conditions to its client.

Once you have an offer from another entity, the mortgaged must inform your entity of your intention to move your mortgage from one bank to another. At this time, your entity may match or improve the offer. The client will have the last word when deciding whether or not to change.

If the subrogation is debtor, the entity will carry out a risk analysis to the person who wants to subrogate the mortgage. Once approved, the new mortgaged will assume the conditions agreed by the seller of the home.

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