It is called a surrogate. It is that operation that allows you to change your mortgage and take a cheaper one. An all in all simple operation, which however, can lead to saving thousands of euros. In the article we reveal how to save up to 30 thousand euros by changing a mortgage with a simple subrogation.
Much higher rates are paid on old mortgages
Those who have taken out a mortgage in recent years now have a huge chance to save huge amounts by changing them. Indeed, in recent years, interest rates have dropped significantly. Today it is possible to obtain a home loan by paying fixed annual interest for the entire duration under 1%.
These are values one quarter lower than the interest rate that was possible to obtain in 2013. Who then took out a mortgage of 150 thousand euros for 25 years, choosing the fixed rate, would now pay 4% annual interest. The installment would still be 792 euros.
How to save up to 30 thousand euros by changing your mortgage with a simple subrogation
But how much could be saved by doing the surrogacy? That is, if you decide to refinance the remaining capital to be paid at current market rates, how much could you save?
The calculation is simple. Let’s take a very common example, namely a mortgage taken out in November 2013 with the conditions indicated above (150 thousand euros at 4% per annum for 25 years). Today, the remaining capital to be paid would be around € 161,660.
By choosing one of the best offers on the market, you would get a fixed annual rate of 0.80% for the remaining 18 years. At this rate the monthly payment of the new mortgage would drop to about 605 euros, or about 185 euros less than the installment of the old mortgage.
In total, the sum to be paid after the subrogation would be approximately 129,080 euros, compared to 161,660 euros with the old mortgage. The savings in 18 years would be around 30 thousand euros.
In conclusion
We have given an example of a mortgage taken out in 2013, but the savings would also exist for mortgages opened later, albeit to a lesser extent. To understand if the subrogation is convenient, just compare the interest on the current mortgage and those of the existing mortgage. If the current rates are lower, then it is better to go to one of the banks with the cheapest rates and get a quote.
Deepening
Whoever has an adjustable rate mortgage runs this great risk.
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