One of the biggest concerns for many people today is economic instability and how it is affecting different sectors. From jobs themselves to many families. Terms such as inflation, EURIBOR, excessive price rises are, unfortunately, becoming more and more the order of the day.
If we talk about the real estate sector, especially if we emphasize the different types of mortgages, we will see that people who, at the time, signed a mortgage with variabl interest, have seen how the monthly payment they owe to their bank has increase disproportionately. In this sense, there are many people who are wondering about the possibility of changing their mortgage rate and moving from a variable to a fixed on. Below, we explain the different options available.
Is it possible to change a variable mortgage for a fixed one?
To answer this question, the first thing we must say is YES. Nowadays it is possible to make this change in our type of mortgage. However, it is necessary to evaluate some aspects if we decide to make this change.
So, when we consider making this change, we find two possible options:
- Transferring the mortgage to another bank, which is known as subrogation.
- Modify the conditions agreed in our mortgage contract with our bank, known as novation.
In both cases, this is a process that usually involves a series of costs, such as commissions and appraisals.
On the other hand, depending on the loan requested, we must also assess the possible profitability or not of making this change, in view of the increase in fixed mortgages.
Subrogation and novation to make a change in mortgage rate
As we have mentioned above, the most common ways to change our mortgage contract is through subrogation or novation.
In the case of the former, there is a change in the financial entity with which we have signed the loan. This change usually entails a change in some of the conditions such as the interest rate to which the mortgage loan was initially subject.
In addition, we may also encounter commission costs when opening a new mortgage with a new bank, and these costs should also be taken into account.
On the other hand, when we talk about novation, this implies modifications in the mortgage clauses through a new agreement with the bank itself. In this case, the interest rate, the capital, the amortisation period or the bonus requirements usually vary.
In the case of novation, and as with subrogation, there is also a fee to be paid, this time to our own bank with which we negotiate the change of conditions, and which usually ranges from 0% to 1% of the percentage of the mortgage credit pending payment.
In either case, we stop paying variable instalments and pay a fixed monthly instalment for the stipulated period until the end of the loan.