Requesting a mortgage with the bank of your life and staying with the same conditions until you have paid back the last cent is something less and less common. There are two ways to lower the final cost of a mortgage loan: make a novation, that is, agree on improvements with the same entity that granted it, or accept a more advantageous offer from another bank and transfer the mortgage there, without spoiling Its age. Or, what is the same, make a surrogacy.
In an environment of low interest rates such as the current one, it is logical that users with an old loan look for the opportunity to reduce the fee they pay each month to repay it. Likewise, entities take advantage of the situation to attract more clients and remove them from the competition through creditor subrogation (this is called the transfer of a mortgage from one bank to another, to distinguish it from debtor subrogation, where whoever changes is the loan holder).
In this way, the encounter between demand and supply has caused a notable increase in mortgage subrogations. These reached 2,848 units in February of this year, compared to 1,043 in the same period last year (last full month before the restrictions imposed by the state of alarm) and 1,233 in the same month of 2019. In February of this year , the subrogations of mortgages have more than doubled with respect to those signed in November, according to the latest data available from the INE, which, in any case, refer to any type of property, not just homes.
“Subrogation is a less tedious process than we can imagine and, after the entry into force of the Real Estate Credit Law, in June 2019, the bank assumes most of the expenses, so it is not very expensive either,” he summarizes the director of Mortgages of the bank comparator iAhorro, Simone Colombelli.
The steps to do a surrogacy are simple. “The holder of a mortgage loan can request it from another entity, without the consent of the creditor bank being necessary”, explains the person in charge of Financing of private clients of Deutsche Bank Spain, Luis Marquet. “The entity that is willing to subrogate will present the user with a binding offer indicating the financial conditions of the new loan,” he adds.
From that moment on, the user has 30 days to decide whether to accept the offer and formalize the subrogation. Colombelli emphasizes the importance of paying attention to the dates, since the user will pay between 100 and 200 euros for this procedure. “If the surrogacy is not signed on time, the offer will expire and, if another is made, the user should pay for it again,” he warns.
Meanwhile, the entity “sends the binding offer also to the client’s current bank, so that it can assess whether it wants to make a counter offer by improving the conditions proposed by the other entity,” says the deputy director of the Real Estate Credit Union (UCI), José Manuel Fernandez. Within seven days the client’s current bank must send the loan debit certificate and for 15 days the new entity will not be able to formalize the subrogation.
Regarding the expenses that the user will have to face, they are summarized in the aforementioned payment for the binding offer plus the appraisal of the home, that is, the study of the property based on various parameters by a specialized company, with the aim of informing the new entity of its value. The cost of the appraisal will depend on the rates of the appraisal company and the value of the home. “To appraise a property of an estimated value of 200,000 euros, the price could be around 300 euros,” calculates Marquet.
On the contrary, notary (“depends on the outstanding capital of the loan, but ranges between 800 and 1,200 euros”), registration in the Land Registry (“between 100 euros and 300 euros”) and agency (“between 100 euros and 500 euros ”, figure Colombelli and Fernández), are assumed by the bank, as well as the Tax on Documented Legal Acts (IAJD).
Of course, “in some cases, the bank in which we had the old mortgage may charge us a commission for subrogation which, depending on the changes involved and the time elapsed since the start of the loan, varies by law between 0% and 2% ”, warns Colombelli.
Is it a good time?
Colombelli says he is convinced that this is a good time to subrogate the mortgage, especially since the index with which the interest rates of variable mortgages are calculated is at historical lows. “The Euribor has pushed down not only variable interest rates, but also fixed ones, so that customers who enjoy an attractive profile for banks will be able to negotiate their conditions in a way that has not been seen before. ”, He highlights.
“It’s as easy as throwing in numbers: if the interest we pay for the mortgage we signed eight years ago is at 4% and now we can get a fixed interest rate of around 1.5%, in cities like Madrid the savings for a A mortgage of about 137,000 euros would be around 26,000 euros if we took it to a new bank now, “says Colombelli.
Even so, “nobody can foresee whether in the future a subrogation will be more or less advantageous, since everything depends on the evolution of the rates and the policies of the financial sector, without forgetting the possible new regulations that could impact on the sector; and a change in mortgage conditions that is profitable today may not be so profitable in the medium or long term ”, warns Fernández. “The problem is that we do not know how long the market is going to maintain the conditions that it presents now,” says Colombelli, for whom, “probably, when the Euribor rises, it will drag up the cost of the entire mortgage offer with it.”
Although the increase in the number of subrogations does not seem “very significant” to him, Fernández confirms that, as a result of the economic crisis derived from the pandemic, “there is a greater positioning of the entities due to this competitive formula to win customers, in a moment in which the transactions of new mortgages have been somewhat paralyzed ”. Therefore, in his opinion, “it is likely that in the short and medium term these operations will be more common.” A position in which Colombelli agrees, who predicts that “subrogations will continue to rise in the coming years, albeit progressively”.