Mortgages who suffer an increase in installments can request a change in the conditions
Subrogation or novation are two alternatives to carry out these modifications.
How to review a mortgage
However, like everything else, changes in the conditions of a mortgage, they are not free. One of the options that clients usually handle is to ask the bank to change the mortgage from a variable to a fixed rate, although everything depends on each case and the conditions of the financial institution. Anyway, Not all mortgages, not all mortgaged are the same.
On the other hand, mortgage holders are also looking for modify the conditions within the same bank, or request a change of entitywhich is known as novation and subrogation.
Difference Between Surrogacy and Novation
The novation of the mortgage allows the mortgaged person renegotiate the conditions of the mortgage with the financial institution without changing entities. Then the subrogation It is a procedure that allows the mortgaged person to modify the conditions of a mortgage changing the loan from one financial institution to another.
From Rankia they explain that when choosing between a novation or a subrogation it is convenient to know which options allow each of them to be carried out:
- The novation allows to increase the capital, while the subrogation does not allow it.
- The amount of expenses in novation is usually less compared to the expenses of surrogacy.
- The novation allows adding holders to the mortgage loan unlike subrogation.
On the other hand, when choosing what to do to combat the increase in the quota, holders must take into account the expenses associated with each operation.
Expenses of a mortgage novation
- Novation fee: It usually oscillates between 0% and 1% of the capital pending payment of the mortgage.
- Notary fees: from 0.2% to 0.5% of outstanding capital.
- Property registration: Rankia estimates that they are 50% of the notary’s expenses.
- Management expenses: They depend on the contracted entity.
- Appraisal: vary by home.
- Tax on Documented Legal Acts (IAJD): This tax is only paid when a capital increase is carried out, and it is usually 0.5% on the capital being increased, although this percentage may vary depending on the Autonomous Community.
Expenses of a mortgage subrogation
- Subrogation fee: This amount amounts to 0.5% during the first five years and 0.25% thereafter, as explained by Claimant.
- Notary fees.
- Property registration.
- Agency.
So what makes up more?
The Bank of Spain states that “the expenses associated with the subrogation of a mortgage are usually higher than those of the novation, but lower than those of the formalization of a new mortgage”. For this reason, from Rankia they recommend that the client analyze the expenses involved in carrying out each operation and compare the benefit of each one.
