The mortgage market changes constantly and at a much faster pace than the repayment period of a mortgage. It is possible that the conditions that the bank offered at the time today seem obsolete or that, due to the fluctuations of the Euribor, the variable interest has skyrocketed and presents the consequent challenge of living with the uncertainty of not knowing how much will have to be paid after the next review.
What few know and few tell is that, if a mortgage is signed with certain conditions, it is not necessary to be bound to them for life.
But what conditions can be changed and in what way? It depends on the type of operation being carried out.
Mortgage novation implies the reopening of the contract to modify its conditions. In other words, it is used to change the conditions of the loan without having to change banks. Through this operation any clause of the contract can be modified, as long as an agreement is reached with the entity.
The conditions that are commonly changed include the price (interest adjustment, change from variable to fixed, elimination of commissions), the capital (increase to finance personal projects), the term (shorten, lengthen or establish a grace period) and the guarantees (add or remove co-owners and guarantees).
According to HelpMyCash, "novation offers the possibility of improving the mortgage, but we must bear in mind that the bank can accept or reject change requests depending on various factors, such as the solvency of the owner and the entity's policy." If the novation proposal is rejected, there are other alternatives to change the conditions of the mortgage.
Creditor subrogation is another effective strategy to improve conditions and consists of transferring the loan from one bank to another. With this procedure, you can reduce the interest rate, change from variable to fixed or mixed (and vice versa), eliminate commissions or associated products or lengthen or reduce the repayment period. On the other hand, the capital, the loan holders or other guarantees, such as guarantors, cannot be modified.
And they point out that, during this year 2024, subrogation is commission-free, as long as it involves a change from the variable rate to the fixed or mixed rate.
They also point out that the best way to start a subrogation is to contact a mortgage broker, who will be able to analyze all the offers on the market and negotiate optimal conditions to improve the mortgage in question.
The option of taking out a new mortgage loan with another entity to cancel the current one is also valid when improving the conditions of the mortgage. By choosing this route, you can increase the capital, lengthen or reduce the repayment period, modify the interest rate (either by reducing it or changing it to fixed), and even adjust the holders, guarantees or other guarantees associated with the loan.
In this case, it is advisable to check the rankings of the best mortgages of the moment and do the numbers to decide to what extent the operation pays off. Because both signing a new mortgage, as well as novation and subrogation have a cost. Among them, canceling and signing a new mortgage is usually the most expensive operation.
“We want to change the idea that the mortgage is immovable: if the conditions that were signed at the time are no longer favorable, they can be negotiated and changed to update them to the current panorama. That is what financial management consists of, among other things, in seeking improvements at every moment that imply significant savings for families,” they point out from HelpMyCash. “We have to lose the fear of managing our mortgage,” they conclude.
