Spanish mortgage holders are increasingly less loyal to their bank. This is certified by the number of creditor subrogations that occurred last year; an operation that allows the mortgage to be changed from one entity to another to modify its conditions. According to the latest data from the National Statistics Institute, between January and November 2023, almost 21,000 transfers of this type were carried out; 5% more than in the same period of 2022.
But when is it appropriate to be unfaithful to the bank? According to the financial comparator HelpMyCash.com, subrogating a mortgage is worth it if you want to reduce its price or if you want to go from a variable interest rate to a fixed or mixed one to protect yourself against possible increases in the Euribor. Provided, of course, that the entity itself refuses to make these modifications or that its conditions are worse than those offered by other banks.
Creditor subrogation, by law, allows the price and term of a mortgage to be modified by transferring it to another financial institution. Therefore, it can be used to reduce the interest rate, as long as another bank is found willing to approve that reduction. This way, the customer will pay a lower fee and save a lot of money in interest in the long run.
If you have a fixed mortgage, it will be difficult to find banks that offer lower rates than those applied a few years ago, since entities have significantly increased their fixed interest rates since 2021 (although now they are beginning to lower them). On the other hand, if you have a variable mortgage, it will be relatively easy to reduce its differential, which is the part that is added to the Euribor to calculate the interest of these products.
From 2010 to 2021, the average interest on variable mortgages ranged between Euribor plus 1% and Euribor plus 2%, according to HelpMyCash. From the beginning of 2022 until now, however, numerous banks have reduced their spreads. Therefore, it is relatively easy to carry out a subrogation to achieve a differential of around 0.5% or less and thus reduce the monthly payments on the mortgage loan.
You can also subrogate a variable mortgage to convert it to a fixed or mixed rate and thus protect yourself from possible increases in the Euribor. This index has begun to decline slightly, but experienced a spectacular rise between 2022 and 2023 due to the rate increases of the European Central Bank: it went from being below 0% to exceeding 4% in just a year and a half.
If the client converts their mortgage to a fixed rate, they will no longer have to worry about the Euribor, since their interest will not depend on this index. And if you change from the variable rate to the mixed rate, you will be able to pay a stable and affordable payment for several years, as a lower fixed interest rate will be applied over the next five, ten or 15 years, depending on what the new bank offers you. . Of course, once that period has passed, the interest will again be variable.
Now, HelpMyCash advises against making this change if an attractive fixed or mixed rate is not achieved. According to its analysts, the conversion is convenient if a bank is willing to offer a fixed interest rate of 3% or less or a mixed one with an initial fixed rate of 2.75% or less.
It is also important to keep in mind that this operation costs money, although not too much. According to the comparator's analysts, to subrogate a mortgage it is necessary to pay the appraisal of the mortgaged home, which costs about 300 euros on average, and the creditor subrogation commission that appears in the deed of the mortgage loan to be transferred, the price of which can be of between 0% and 2% on the amount pending to be returned.
The subrogation commission, however, will be free if the mortgage is transferred in 2024 to convert it from the variable rate to the fixed or mixed rate (with an initial fixed rate of three years). And if this operation is carried out from 2025, the price of the commission cannot exceed 0.05% of the outstanding amount, regardless of what is stated in the deed, and can only be charged if the loan entity is changed. during the first three years of your repayment period.
Finally, HelpMyCash highlights that any bank may be willing to offer a subrogation, if the client is solvent and the operation fits with its internal policy. However, its analysts warn that many entities prefer another similar operation: granting a new mortgage, with better conditions, to cancel the one the applicant has.
Liquidating a mortgage with another is more expensive than subrogating it, since you have to pay the expenses associated with the registration cancellation (about 1,000 euros on average) and the commission for partial early amortization, which can cost between 0% and 2% of the mortgage. the outstanding amount (0% if the interest is variable and cancellation occurs in 2024). However, it may be more worthwhile if better conditions are achieved.
It is advisable, therefore, to explore all the options: go to as many banks as possible or entrust the application to a broker, compare the offers obtained (for subrogation or new mortgages), ask for a counteroffer from the bank itself and opt for the proposal that is most advantageous.
