Refinancing Mortgages in Spain: An Effective Solution to Combat Rising Housing Prices

The price of housing is increasingly higher in Spain, which has affected citizens in various ways. Firstly, it has made it difficult for young people to become independent and, secondly, it has made it very difficult for many families to make ends meet and even more difficult to make mortgage payments. And it is that, the price paid has not stopped increasing due to the increases in interest rates carried out by the European Central Bank (ECB).

These increases, together with the high percentage in which inflation is found, have caused the amount that up to now citizens paid for the mortgage to increase considerably, in some cases up to 2,000 euros more per year. Faced with this situation, the tools to be able to face these payments have been gaining prominence, as is the case of the refinancing. This measure consists of modifying the financing conditions, which can include aspects such as interest, terms or the amount of the installments that are paid month by month.

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According to property records, more than 11,000 citizens with a mortgage chose to use this tool, of which almost 40% made this decision due to changes in interest rates due to ECB policies. In this way, the number of fixed-interest mortgages has increased, going from 13,5% a 46,7%. On the other hand, those of a variable rate have suffered a decrease from 85.4% to 52.1%.

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Carrying out this type of process entails a series of modifications such as reviewing the amortization period and associated expenses, which will vary depending on the conditions that have been agreed with the bank. In addition, there are several alternatives to carry out the refinancing of the mortgage. First of all, the novation of the mortgage which consists of changing the conditions of the mortgage loan. An alternative carries a commission cost of 0.15% for the first three years.

On the other hand, it can be carried out through the mortgage subrogationwhich consists of changing the bank mortgage to get better benefits, with a cost identical to that of novation to which must be added the appraisal of the house that supposes between 300 and 600 euros And, finally, cancel current mortgage y open a newwhich usually involves a cost of up to 1% of the mortgage price

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