Throughout the duration of our mortgage loan, our economic or personal situation may change and we may need to change the mortgage and improve their conditions. To know what is the best way to do it, we must know well the three options we have: make a novation, a subrogation or a cancellation of the mortgage. Then we will see the characteristics of each of them and for what cases are convenient to use them. In this way, we will have clearer these concepts in case we have to carry out any of these operations and especially with which we will save more money.
1. Novation: negotiate the conditions with your bank
With a novation, we can change any of the conditions included in our mortgage through a negotiation with the bank. Therefore, we can improve the clauses of the mortgage contract by removing guarantees or commissions, lowering interest and expanding capital, among other options.
Unlike the subrogation, which we will see below, with a novation, we can renegotiate any term of the mortgage, as long as the entity agrees to make the proposed changes.
In addition, this operation gives us certain advantages with respect to changing banks because we save the cost of appraising the house, it allows us to add or remove headlines and we can increase the capital.
2. Subrogation: change entity and save money
The subrogation of a mortgage allows us to transfer the mortgage loan from one entity to another, to improve some of the conditions we had and reduce monthly payments. For this reason, this operation is carried out when we want to lower the interest of the mortgage loan or to remove some abusive clause and thus save money.
However, making a mortgage subrogation has a series of costs:
- Commission by subrogation. In case the contract has it, we will have to pay 0.5% of the outstanding capital if it is made during the first five years and 0.25% from the sixth.
- Notary fees. They have an average cost of 0.2% and 0.5% on the outstanding capital.
- Manager’s fees. Around 200 and 400 euros.
- Property registration. They usually have a cost of fewer than 100 euros.
- Appraisal of the house. It depends on the appraiser, but it has more or less a cost of 300 euros.
If we get a bank to make an offer to subrogate us, we will present the conditions to our entity that will have 15 days to equalize or improve it. In case you do, we can not carry out the change of bank and we will have to make a notation to change the conditions.
3. Refinancing the mortgage: ask for an offer that fits more to you
We can also make a cancellation of our mortgage and request a new one that contains better conditions. So, this operation can be an option if we want to modify some clause, lower the interest rate or get more money to pay other loans and we have not achieved an agreement with our entity or an offer from another bank.
Of course, although with this option we can negotiate from scratch the conditions of the new mortgage, we must bear in mind that signing a new mortgage has associated a series of expenses much higher than novation or subrogation.