Mortgage subrogation represents an essential legal mechanism in French real estate law, facilitating the transfer of rights to a mortgage debt from one creditor to another. Ideal for owners wishing to change banks without issuing a new mortgage, it allows the original mortgage registration to be retained, thus reducing loan costs. The process requires the agreement of all parties involved and is carried out under notarial supervision, ensuring a legal and efficient transition, while preserving the guarantees on the real estate concerned.
Understanding the mortgage loan transfer by subrogation
Mortgage subrogation is a legal process for transferring the rights to a mortgage debt from one creditor to another. Typically used when an owner wishes to change banks for their property loan, this technique facilitates the transfer without requiring a new mortgage.
Procedure and implications:
- Subrogation is governed by article 1346-2 of the Civil Code, which requires that the debtor subrogates the new lender in his rights, with the agreement of the initial creditor.
- The operation is carried out with the help of a notary who draws up the authentic deed necessary for the transfer.
- It allows you to maintain the existing mortgage on the property, thus avoiding release costs.
Advantages of choosing subrogation:
Opting for subrogation can significantly reduce the costs associated with securing a loan. By directly transferring the mortgage, the borrower avoids discharge fees and minimizes the costs associated with the mortgage registration of the new beneficiary.
The financial benefits of mortgage subrogation
Mortgage subrogation has several financial advantages over creating new security. Mainly, it saves on discharge fees and costs associated with establishing a new mortgage.
Key points to consider:
- Fewer Guarantee Fees: Unlike conventional mortgages, subrogation does not require release fees, thereby reducing total costs for the borrower.
- Accelerated process: The transfer of debt by subrogation is generally faster than the establishment of a new mortgage, allowing the borrower to carry out its financing more efficiently.
However, setting up subrogation can be complex, requiring the agreement of all parties involved, including the financial institutions involved.
Limits of mortgage subrogation in the repurchase of credits
During a mortgage redemptionmortgage subrogation is generally not a viable option. The redemption results in the early repayment of the initial loan, thus closing the contract and terminating the existing mortgage registration.
Alternative a second rank:
However, there are alternatives, such as setting up a second mortgage when financing a mortgage buyout. This method allows you to keep the original home loan while consolidating other debts, thus avoiding the often costly discharge fees.
- The new bank can position itself in second place, that is to say after the initial creditor of the real estate loan, who remains in first place.
- This approach avoids release costs and simplifies the management of guarantees on the property.
Notary procedures:
To implement this strategy, a notarial deed is necessary to register the bank carrying out the consolidation as the new beneficiary of the mortgage. The notary plays a crucial role in this process, by ensuring the validity of previous mortgages on the property through a mortgage statement obtained from the Land Registration and Registration Service.
