A mortgage subrogation is a modification in one of the parties to the mortgage agreement. Since there are two parties, the borrower and the lender, there are two types of subrogation:
- Borrower subrogation
This occurs between individuals when you buy a house that is already mortgaged and you decide to take over the seller's mortgage.
- Lender subrogation
This occurs between banks when you decide to transfer your current mortgage to another bank.
Why would you consider a mortgage subrogation?
You want a better interest rate
This is usually the most common reason. As you know, mortgages have a very long life during which the market may change, and if the market changes the interest rates and mortgage offers will probably change as well.
You wan to cancel the other products you acquired
When a bank offers a mortgage, it is usually on the condition that you acquire other products such as insurance and a pension plan, etc. However, these products indirectly make your mortgage more expensive.
You've had your fill of the unfair terms
Subrogating your current mortgage can save you from paying excessive penalties, such as exorbitant late payment interest.
You don't want to pay any more fees
Maybe your mortgage has certain conditions that you no longer want to pay for. For example, a fee for making partial repayments.
You want to modify the repayment terms
Maybe things are going well and you want to reduce the repayment term. Or maybe things are not going so well and you want to reduce your monthly instalment. Either way, it's worth considering a subrogation offer.
You are going to buy a house and you want to save on the costs and fees
If you are going to buy a house that is already mortgaged, subrogating or taking over the seller's mortgage can save you certain costs and fees.
What to keep in mind
Transferring your mortgage to another bank brings many benefits and is less complex than you might think. Even so, you should take into account the following:
- A subrogation also entails costs, so you will have to weigh up whether the savings compensate for the disbursement.
- The years you have left to repay your current mortgage. If the new mortgage is cheaper, even by a modest amount, each year represents a saving.
- And, last but not least, you don't need permission from the bank that granted you the mortgage to transfer it to another bank.
Ah, that's the million-dollar question:
The costs related to the old mortgageYou will have to pay the early cancellation fee applied by the bank where you took out the mortgage. The amount will depend on the type of mortgage, the date when you signed the agreement and the stage reached in the mortgage term at the time of the transfer.
The costs related to the new mortgageUnder the terms of the 2019 mortgage act, you will only have to pay the new appraisal costs. All the other costs, such as the notary and stamp duty, etc., will be paid by the new bank.
To make up your mind,
Find and compareThis is the first step: check all the offers on the current mortgage market. Compare different banks and choose the offer that best suits your needs.
Wait for the binding offerOnce you've chosen a bank, wait to receive the binding offer. This is the document specifying all the contractual terms and conditions.
Compare our offer and the counter offerYour bank may make a counter offer. Compare it with our binding offer and now that you have all the details make your decision.
Now you can compare it
- Up to 30 years
- For primary residences and second homes
- Hasta 30 años
- Para primera y segunda vivienda
See Steps to follow to subrogate your mortgage Steps to follow to subrogate your mortgage
Discover all our mortgages
The market may have changed considerably since you took out your mortgage, and it may be that the bank you have it with is no longer offering the best conditions for your current situation. At Bankinter we have a wide range of mortgages and we think you'll find the one you are looking for.
You can find out more through our website, telephone banking and, of course, at our branches. We'll tell you the documents we need to initiate the analysis and we'll give you full details of the mortgage conditions and characteristics so that you're clear about everything before we start the subrogation process.
Analysis of the operation and confirmation of terms and conditions
Once we've analysed the operation, we'll confirm our offer and all the terms and conditions. We'll do this through what is known in financial jargon as a “binding offer”, presented in an approved format: the European standardised information sheet.
Signature of the mortgage
This will usually take three weeks, after which the operation will be ready for signature in line with the terms of the Real Estate Credit Act.